It is well-settled that if you are a debtor in chapter 11, you do not have the unfettered right to convert the case to a chapter 7 liquidation. A recent 10th Circuit decision shows why. Kearney v. Unsecured Creditors Committee et al., BAP No. 20-33, 2021 WL 941435 (B.A.P. 10th Cir. Mar. 12, 2021).
The COVID-19 Bankruptcy Relief Extension Act of 2021, enacted on March 27, gives small businesses with noncontingent liquidated debts (excluding obligations to insiders and affiliates) that total $7.5 million or less until March 27, 2022, to take advantage of a Subchapter V reorganization. The qualifying debt limit was first increased from $2,725,625 to $7.5 million beginning on March 27, 2020, for one year under an amendment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to Chapter 11 of the U.S. Bankruptcy Code.
On March 3, 2021, the PROTECT Asbestos Victims Act, otherwise known as S.574, was introduced in the U.S. Senate by Senators Thom Tillis (R-NC), John Cornyn (R-TX), and Chuck Grassley (R-IA). This legislation attempts to reform the asbestos bankruptcy trust system by providing oversight of asbestos bankruptcy trusts, ensuring those harmed by asbestos receive fair and just compensation, and eliminating fraud and abuse within the trust system.
On April 5, 2021, The Collected Group, LLC, along with certain affiliates that design, distribute, and retail three contemporary, consumer-inspired, apparel lifestyle brands: Joie, Equipment, and Current/Elliott, filed a petition under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the District of Delaware (Case No. 21-10663).
Earlier in the pandemic, our team identified the economic crisis caused by COVID-19 as a growth opportunity for businesses with the vision and the resources to take advantage. One such opportunity is the chance to diversify or grow by acquiring distressed competitors, suppliers, or customers.
On Friday, March 19, 2021, Congressional lawmakers introduced a bill that would amend the U.S. Bankruptcy Code to prohibit bankruptcy judges from permanently enjoining or releasing legal claims of states, tribes, municipalities or the U.S. government against non-debtors.
Bankruptcy law has seen many changes in 2020 and 2021. Some of these were enacted in response to COVID, but many other changes were included in the Bankruptcy Code before the pandemic. This article highlights some of these changes and their impact on the rights of lenders, trade creditors, suppliers, landlords, tenants, and debtors.
The debtors' legal malpractice claim was "not property of their bankruptcy estate," held a split Ninth Circuit on June 30, 2020. In re Glaser, 816 Fed. Appx. 103, 104 (9th Cir. June 30, 2020) (2-1). But the U.S. District Court for the District of Minnesota one week later affirmed a bankruptcy court judgment that "the [debtor's] estate was the proper owner" of such a claim. In re Bruess, 2020 WL3642324, 1 (D. Minn. July 6, 2020).
A secured lender's "mere retention of property [after a pre-bankruptcy repossession] does not violate" the automatic stay provision [362(a) (3)] of the Bankruptcy Code, held a unanimous U.S. Supreme Court on Jan. 14, 2021. City of Chicago v. Fulton, 2021 WL 125106, 4 ( Jan. 14, 2021). Reversing the Seventh Circuit's affirmance of a bankruptcy court judgment holding a secured lender in contempt for violating the automatic stay, the Court resolved "a split" in the Circuits. Id. at 2. The Second, Eighth and Ninth Circuits had agreed with the Seventh Circuit.