Under 11 U.S.C. § 727(a)(2), an individual debtor may be denied a discharge, in its entirely, for making a transfer “with intent to hinder, delay, or defraud” a creditor or the trustee.

On April 17, 2023, the Bankruptcy Court for Eastern Michigan ruled:

Building on emerging trends, 2024 has seen a continued rise in the use of equity-linked debtor-in-possession (DIP) financing in Chapter 11 cases.

Recent examples from WeWork and Enviva illustrate how stakeholders are leveraging this innovative tool to drive broader reorganization strategies and outcomes rather than as a mechanism solely providing interim financing to fund a debtor’s operations during the pendency of its bankruptcy case.

WeWork

11 U.S.C. § 1191(c)(2) provides (emphasis added):

• “(c) . . . the condition that a plan be fair and equitable . . . includes . . . (2) . . . all of the projected disposable income of the debtor to be received in the 3-year period, or such longer period not to exceed 5 years as the court may fix, . . . will be applied to make payments under the plan.”

There is little-to-no guidance in the Bankruptcy Code on what “as the court may fix” might mean. So, that meaning is left to the courts to decide.

Weil's Appellate & Strategic Counseling group welcomes you to Weil's SCOTUS Term Review. Here, we summarize and analyze the cases from the 2023 Supreme Court Term that are most germane to our clients' businesses.

In most bankruptcies, the company decides to file for relief. In involuntary bankruptcies, creditors force the company into bankruptcy. Involuntary petitions are an extreme remedy, and therefore the requirements and standards to meet for filing such petitions are strictly construed and applied. If creditors meet the requirements under the Bankruptcy Code for filing an involuntary petition, it can serve as a powerful tool to use against a debtor.

Key Issues

Teacher Retirement System of Texas plans to reduce its private equity target allocation to 12% from a current exposure of 16.7% starting in October. The planned reduction, which may be implemented over a number of years. For now, the change in target allocation likely means reduced new commitments, while some of the rebalancing could be accomplished by fund AUM growth.

Five best practices for retailers to manage cash, cut costs, and stay afloat as debt comes due

In late 2017, a Bloomberg headline read, “America’s ‘Retail Apocalypse’ Is Really Just Beginning.” The main culprit, the authors suggested, was the amount of high-yield debt on company balance sheets, which would balloon just as a record wall of debt across all industries came due.

The Supreme Court’s landmark decision in Harrington v. Purdue Pharma L.P. – holding that the Bankruptcy Code does not authorize the release of third-party claims against non-debtors in a reorganization plan without the consent of the affected claimants – will have a lasting impact on mass tort bankruptcy cases and likely nullifies one of the primary benefits of the so-called “Texas Two-Step” strategy: obtaining third-party releases of the debtor entity’s non-debtor affiliates.

On April 23, 2024, the American Bankruptcy Institute’s Subchapter V Task Force issued its Final Report.

This article is the eighth in a series summarizing and condensing the Task Force’s Final Report into “a nutshell.” The subject of this article is:

• whether the Subchapter V trustee or other party in interest should be allowed to file a plan after debtor’s removal from possession.[Fn. 1]

Recommendation

On June 6, the United States Supreme Court decided Truck Insurance Exchange v. Kaiser Gypsum Co., Inc., No. 22-1079, holding that insurers with financial responsibility for bankruptcy claims are “parties in interest” under 11 U.S.C. § 1109(b) that “may raise and may appear and be heard on any issue” in a Chapter 11 bankruptcy case.