11 U.S.C. § 365(c)(2) says (emphasis added):

While Chapter 11 does not require debtor insolvency, it does require good faith (applicable to the petition and the plan), which for solvent debtors seeking to reject and modify lease-counterparty rights, includes establishing some level of financial distress susceptible to resolution through the plan process.

Key takeaways

Section 363(m) of the Bankruptcy Code protects purchasers of assets in a bankruptcy sale. The provision promotes finality of bankruptcy court orders approving sales and is intended to maximize the value that a debtor or bankruptcy trustee is able to realize in a sale of bankruptcy estate assets by providing third-party purchasers with certainty that the validity of a bankruptcy sale will not be subject to subsequent challenges.

On January 20, 2026, the United States Supreme Court issued its unanimous 9-0 opinion written by Justice Alito with a concurrence by Justice Sotomayor in Coney Island Auto Parts Unlimited, Inc. v. Burton and addressed whether vacating a void judgment has a time limit. Prior to the decision, there was an 11-1 circuit split, and the majority view had been that parties were permitted to move to vacate void judgments irrespective of how much time had passed.

This is the second in a series of discussions about insurance issues unique to the Lone Star State.

Here’s a question about the new Uniform Assignment for Benefit of Creditors Act (the “Uniform ABC Act”):

• Is a liquidation under the Uniform ABC Act a good thing or a bad thing for the debtor’s unsecured trade creditors?

The answer is easy: it’s a good thing.

Introduction

Bankruptcy activity across the United States increased noticeably in 2025, marking one of the sharpest rises in more than a decade and reflecting mounting financial pressure on businesses and individuals alike. While the total number of annual bankruptcy filings remains lower than pre-pandemic levels, overall filings grew at a steady pace compared to the prior year. In fact, 2025 was among the most active periods for business filings since the aftermath of the Great Recession with tens of thousands of business filers seeking protection under Chapter 7 or Chapter 11.

28 U.S.C. § 157(b)(5) provides: “personal injury tort and wrongful death claims shall be tried in the district court in which the bankruptcy case is pending, or in the district court in the district in which the claim arose”

In other words, “personal injury tort” and “wrongful death” claims cannot be tried by a bankruptcy court.

Welcome to Distressed Debt Legal Insights, Ropes & Gray’s source of timely insights for professionals navigating the complex world of liability management and special situations finance. In this issue we discuss the first major decision of 2026: STG Logistics. The January 3 opinion primarily denies the motions to dismiss brought by defendants seeking to validate their October 2024 drop down plus double dip transaction.

Transaction Details and Procedural History