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.

The UK Government has finally set out details of the proposed measures to temporarily restrict the use of statutory demands and winding up petitions during the worst of the COIVD-19 pandemic

Whilst no further action has, as yet, been taken to implement the foreshadowed changes to insolvency law in England and Wales (see our comments on the same), the Business and Property Courts of England and Wales ("BPC") have moved quickly to release a temporary Practice Direction on insolvency proceedings ("TIPD").

The Secretary of State for Business, Energy and Industrial Strategy, Alok Sharma, has announced that the government will be introducing a number of changes to the insolvency regime in England & Wales as part of its response to the COVID-19 outbreak.

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.