While the frequency of Bankruptcy filings is unpredictable year over year, their presence is certain when pursuing subrogation claims. Now, throw into the mix an unsteady economy and the threat of a Defendant filing for bankruptcy is present. The Federal Bankruptcy Code provides for insurers to get around the automatic stay of a bankruptcy filing in certain situations. Below is a description of the three most commonly used sections to avoid the automatic stay in bankruptcy filings.

New legislation ratifies a receiver’s right to sell property free and clear of liens.

The U.S. Court of Appeals for the Ninth Circuit, in a case of first impression and the first published circuit court opinion to address the issue, recently held that each and every debt collector — not just the first one to communicate with a debtor — must send the debt validation notice required by the federal Fair Debt Collection Practices Act.

When Detroit filed for Chapter 9 bankruptcy on July 18, 2013, it was the largest municipal bankruptcy filing in U.S. history. The bankruptcy court calculated Detroit to be $18.5 billion in debt.

(6th Cir. B.A.P. Sep. 30, 2016)

Vendors — take note! The Delaware bankruptcy court in In re Reichhold Holdings US Inc. recently issued an important ruling for vendors asserting reclamation rights.

Over three years ago, in September 2013, Pirinate Consulting Group LLC, in its capacity as Litigation Trustee (the “Trustee”) of the NewPage Creditor Litigation Trust, began filing complaints in the Delaware Bankruptcy Court seeking the avoidance and recovery of what the Trustee alleges are preferential transfers.

On October 4, 2016, the Eleventh Circuit Court of Appeals ruled that chapter 7 debtors who file a statement of intention to surrender real property in bankruptcy cannot later contest a foreclosure action, and bankruptcy courts have broad power and authority to sanction violations. Failla v. CitiBank, N.A., case no. 15-15626 (11th Cir. October 4, 2016).

On 2 September 2016, Hanjin filed a petition under Chapter 15 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of New Jersey, seeking recognition of its Korean rehabilitation proceedings as a "foreign main proceeding." Hanjin also sought provisional and final relief to prevent creditors from taking enforcement actions against Hanjin's interests within the jurisdiction of the United States.

A recent Delaware bankruptcy court decision may potentially place at risk an equity sponsor’s ability to retain proceeds from the sale of a portfolio company whose performance later deteriorates, where the selling sponsor acted in bad faith and the portfolio company was or became insolvent at the time of or on account of the sale.

Circuit Break? Delaware Bankruptcy Court Rejects Second Circuit Ruling on State Law Fraudulent Transfers