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Debt or equity? Which Circuit? Recent cases on equitable recharacterization

Seeking to recharacterize a debt claim as an equity contribution to the debtor through the equitable powers of the bankruptcy court (something we’ve written about quite a bit in our blog) is one way to reduce creditor claims against the bankruptcy estate, but only in certain circuits.

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Debtor, Debt, United States bankruptcy court
Citing plain language of Bankruptcy Code and split with other Circuits, Fifth Circuit overturns pro-snax decision

Prior to the enactment of the Bankruptcy Code in 1978, the Fifth Circuit took a stringent approach to the payment of attorney’s fees – holding that public policy supported restricting attorney compensation in bankruptcy cases and that attorneys should not expect to receive the same compensation as if working for a non-bankrupt concern.  Congress enacted 

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Fifth Circuit
Tipping point: plan clarification or plan modification? Third Circuit denies bankruptcy court’s use of its plan clarification powers to circumvent plan modification requirements of section 1127

In post-confirmation proceedings, bankruptcy courts maintain the ability to clarify a plan where silent or ambiguous, and interpret a plan to advance equitable considerations.  However, bankruptcy courts are not allowed to modify a plan outside the confines of section

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Bankruptcy, Debtor, Class action, United States bankruptcy court, Third Circuit