The ability of a bankruptcy trustee to avoid certain transfers of a debtor's property and to recover the property or its value from the transferees is an essential tool in maximizing the value of a bankruptcy estate for the benefit of all stakeholders. However, a ruling recently handed down by the U.S. Court of Appeals for the Tenth Circuit could, if followed by other courts, curtail a trustee's avoidance and recovery powers. In Rajala v. Spencer Fane LLP (In re Generation Resources Holding Co.), 964 F.3d 958 (10th Cir. 2020), reh'g denied, No.
The Australian government has taken swift action to enact new legislation that significantly changes the insolvency laws relevant to all business as a result of the ongoing developments related to COVID-1
Andrew Dietderich, James Bromley and Fabio Weinberg Crocco, Sullivan & Cromwell LLP
This is an extract from the third edition of The Guide to Corporate Crisis Management published by Latin Lawyer. The whole publication is available here.
You just heard a rumor that your largest retail customer is in financial distress and may file for bankruptcy. After a moment of panic, you review your consignment agreement with the retailer (this assumes that you have a written agreement) and you are relieved to see that it clearly provides that you still own the goods that you delivered to your customer and you are entitled to pick them up at any time. All good, right? Not necessarily.
We recently reported on Delaware Judge Christopher Sontchi’s decision in the Extraction bankruptcy to permit the rejection of midstream gathering agreements.1 Fellow Delaware Judge Karen Owens followed Extraction in the Southland Royalty decision issued November 13, 2020.2 Judge Owens determined that Southland Royalty Company, LLC (“Southland”), an E&P operator with assets primarily in Wyoming, could reject the gas gathering agreement and sell its assets free and clear of the agreement.
COVID-19 Cuts a Harsh Path Through the Aviation Sector
A lender’s state law tort claims against “non-debtor third-parties for tortious interference with a contract” were “not preempted” by “federal bankruptcy law,” held the New York Court of Appeals on Nov. 24, 2020. Sutton 58 Associates LLC v. Pilevsky, 2020 WL 6875979, *1 (N.Y. Ct. Appeals, Nov. 24, 2020) (4-3). In a split opinion, the Court of Appeals reversed the Appellate Division’s dismissal of a lender’s complaint against the debtors’ non-debtor insiders. The lender will still have to prove its case at trial.
The Asserted Claims
Introduction
From iconic retail brands like Neiman Marcus to popular entertainment venues like Chuck E. Cheese, business bankruptcies have escalated in 2020 due to the COVID-19 pandemic. Company executives invested in Non-Qualified (NQ) plans risk losing a substantial amount in retirement savings due to guidelines set under Section 409A. These guidelines protect NQ plan assets from a change in corporate control but not from a bankruptcy filing, since NQ plan participants are treated as unsecured creditors.