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Statute of Limitations, Res Judicata, and Collateral Estoppel—Oh My! Asserting Affirmative Defenses in Delaware Bankruptcy Court

The issue of whether directors, officers, and/or shareholders breached their fiduciary duties to a company prior to bankruptcy is commonly litigated in chapter 11 cases, as creditors look to additional sources for recovery, such as D&O insurance or “deep-pocket” shareholders, including private equity firms. The recent decision in In re AMC Investors, LLC, 637 B.R. 43 (Bankr. D. Del. 2022) provides a helpful reminder of the importance of timing in bringing such claims and the use by defendants of affirmative defenses to defeat those claims.

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Private equity
Lenders Beware: Lender Liability is Real and Can Cost You Dearly

There is a common misconception that lender liability is a thing of the past. However, a recent decision provides a warning to lenders that they can be held liable and face substantial damages if they exercise excessive control over a debtor’s business affairs.

USA, Banking, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Due diligence
Lenders Beware: Lender Liability is Real and Can Cost You Dearly

There is a common misconception that lender liability is a thing of the past. However, a recent decision provides a warning to lenders that they can be held liable and face substantial damages if they exercise excessive control over a debtor’s business affairs.

USA, Banking, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Due diligence
ASHINC or Swim Case Study: Lessons for Private Equity Sponsors on Risks Relating to Distressed Portfolio Companies (Part I: Continuous Contractual Breach Under a Loan Agreement)

In an opinion that mostly flew under the radar in 2021, Judge Christopher Sontchi from the Bankruptcy Court for the District of Delaware (the “Court”) found investment firm Yucaipa American Alliance Fund I, L.P. and Yucaipa American Alliance (Parallel) Fund I, L.P.

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Private equity, Fourth Amendment
ASHINC or Swim Case Study: Lessons for Private Equity Sponsors on Distressed Portfolio Company Risks (Part I: Sponsor Breach of Company Loan Agreement)

In an opinion that mostly flew under the radar in 2021, Judge Christopher Sontchi from the Bankruptcy Court for the District of Delaware (the “Court”) found a private equity sponsor (the “Sponsor”)1 liable (and, in some cases, not liable) under various contractual and tort theories in connection with actions the Sponsor took or did not take in its failed efforts to stave off a potential bankruptcy filing of its portfolio company, Allied Systems Holdings, Inc., now known as ASHINC Corporation (“Allied” or the “Company

USA, Company & Commercial, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Private equity, Fourth Amendment
Arbitrate? You Can’t Make Me! Rejection Trumps Arbitration, Says Texas Bankruptcy Court

Overview

USA, Arbitration & ADR, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Federal Arbitration Act 1926 (USA)
The Third Circuit Lets the Katz Out of the Bag: No Sovereign Immunity for California in the Post-Confirmation Venoco Dispute

The Executive Summary provided a short version of the facts. The next few paragraphs provide a longer version, or you can skip to the next section.

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, European Commission, Supreme Court of the United States
Prepetition Claim or Postpetition Claim? The Timing of a Claim When A Debtor’s Prepetition Wrongful Actions Continue Postpetition

Executive Summary

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Supreme Court of the United States
Bankruptcy No Sanctuary Against Government Enforcement Actions: NRA’s Chapter 11 Case Dismissed as Bad Faith Filing

Executive Summary

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Corporate governance
A Reminder That a 9019 Motion Is Not a Slam Dunk: Bankruptcy Court Denies 9019 Motion After Determining That Approving Certain Findings Required By Settlement Would Amount to Inappropriate Advisory Opinion

Introduction

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Bankruptcy