A recent ruling from the United States District Court for the Southern District of New York sent shock waves through the legal and financial community, with some shouting that this “could be a gamestopper for the private equity business.”1 Although the ruling in In re Nine West LBO Securities Litigation2 breaks new ground and arguably narrows the protections available to directors under the normally-broad business judgment rule, there are clear lessons others can take from this saga to prevent a similar fate.
Executive Summary
A recent decision from the United States Bankruptcy Court for the Northern District of Texas, In re Care Ctrs., LLC, No. 18-33967, 2020 Bankr. LEXIS 3205 (Bankr. N.D. Tex. Nov. 12, 2020), examined (1) the scope of bankruptcy court subject-matter jurisdiction for post-confirmation actions filed in state court and removed to bankruptcy court; and (2) when the court must or should abstain and remand a proceeding back to the court where the action was originally brought.
OVERVIEW
In an important decision issued at the end of August, the United States Court of Appeals for the Third Circuit, in In re Tribune Co., Case No. 18-2909 (3d Cir. Aug. 26, 2020), held that subordination agreements need not be strictly enforced when confirming a chapter 11 plan pursuant to the Bankruptcy Code’s cramdown provision in section 1129(b)(1). In its decision, the Third Circuit also encouraged bankruptcy courts to apply “a more flexible unfair-discrimination standard” and set forth eight guiding principles to aid in that effort.
On 22 April 2020, the Slovak parliament passed a new law to help reduce the impact of COVID-19.
It is now possible for businesses to request temporary protection that will have the following effects:
Since the outbreak of COVID-19 in Europe, the Slovak Parliament has adopted a series of new laws aiming predominantly to support employment, to provide financial aid and tax relief (particularly to SMEs) and to preserve and regulate legal enforcement.
The insolvency law related measures include mainly:
Debtor's filing
The statutory time limit for debtors to file for bankruptcy due to over-indebtedness (balance sheet test) that occurred between 12 March and 30 April 2020 has been prolonged from 30 to 60 days (and is expected to be prolonged further).
In a recent decision, In re Philadelphia Entertainment and Development Partners, L.P., No. 14-000255-mdc (Bankr. E.D. Pa. Dec. 31, 2019), the Bankruptcy Court for the Eastern District of Pennsylvania held that state sovereign immunity does not prevent bankruptcy courts from hearing fraudulent transfer claims against states.
On January 13, 2020, the United States Bankruptcy Court for the District of Delaware issued an opinion in In re La Paloma Generating Company, LLC., Case No. 16-12700 [Adv. Pro.
The United States Supreme Court has granted certiorari on an issue that has greatly divided Circuit Courts of Appeal – the question of whether an entity that retains possession of a debtor’s property has an affirmative obligation to return that property to the debtor or trustee immediately upon the filing of the bankruptcy petition or risk being in violation of the automatic stay.
The Supreme Court, in Ritzen Group, Inc. v. Jackson Masonry, LLC,1 issued an unanimous opinion last week, ruling that the Court of Appeals for the Sixth Circuit correctly denied the ability of creditor Ritzen Group Inc.