Two recent Supreme Court of Canada decisions demonstrate that the corporate attribution doctrine is not a one-size-fits-all approach.
In my most recent blog post, I provided some tips for creditors who find themselves in the Subchapter V arena. This is somewhat of a follow-up to that one.
Court approval of a sale process in receivership or Bankruptcy and Insolvency Act (“BIA”) proposal proceedings is generally a procedural order and objectors do not have an appeal as of right; they must seek leave and meet a high test in order obtain it. However, in Peakhill Capital Inc. v.
The overwhelming majority of my practice has involved larger, complex Chapter 11 cases and out-of-court restructurings, and representing debtors, Chapter 11 trustees, committees or creditors.
When Subchapter V came to be in 2019 under the Small Business Reorganization Act, I honestly did not think that I would have the opportunity to participate in those types of cases due to the debt limitations imposed by statute.
The overwhelming majority of my practice has involved larger, complex Chapter 11 cases and out-of-court restructurings, representing debtors, Chapter 11 trustees, committees, or creditors. However, with the expansion during Covid of the Subchapter V debt limit to $7.5 million, I have found myself participating in multiple Subchapter V cases as counsel to creditors. I discovered quickly that habits developed in larger Chapter 11 cases do not necessarily translate to Subchapter V.
When a debtor receives a bankruptcy discharge, section 524(a) of the U.S. Bankruptcy Code prohibits a creditor from seeking to collect a prepetition debt against the discharged debtor or its property. Importantly, the discharge does not extinguish the debt—it merely limits recourse against the discharged debtor. Section 524(e), however, provides that the discharge does not affect the liability of non-debtors for the discharged debt.
A recent decision in theIn re RMH Franchise Holdings bankruptcy case pending in the District of Delaware, highlights the importance of complying with a contract’s termination provision before the contract counterparty files for bankruptcy.
(Bankr. S.D. Ind. Dec. 4, 2017)
The bankruptcy court grants the motion to dismiss, finding the defendant’s security interest in the debtor’s assets, including its inventory, has priority over the plaintiff’s reclamation rights. The plaintiff sold goods to the debtor up to the petition date and sought either return of the goods delivered within the reclamation period or recovery of the proceeds from the sale of such goods. Pursuant to 11 U.S.C. § 546(c), the Court finds the reclamation rights are subordinate and the complaint should be dismissed. Opinion below.
(Bankr. E.D. Ky. Nov. 22, 2017)
(B.A.P. 6th Cir. Nov. 28, 2017)
The Sixth Circuit B.A.P. affirms the bankruptcy court’s dismissal of the Chapter 12 bankruptcy case. The court finds that the bankruptcy court failed to give the debtor proper notice and opportunity to be heard prior to the dismissal. However, the violation of due process was harmless error. The delay in filing a confirmable plan and continuing loss to the estate warranted the dismissal. Opinion below.
Judge: Preston
Attorney for Appellant: Heather McKeever