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A Check is Transferred When It’s Honored, Not Delivered

Readers familiar with contract law undoubtedly know the “mailbox rule,” that an offer is accepted the moment a document goes in the mail.1 The United States Bankruptcy Appellate Panel for the Ninth Circuit (the “BAP”) recently dealt with its own variant of the mailbox rule: does the issuance of a check constitute a transfer of estate assets on the date the check is delivered or on the date it is honored?

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Ninth Circuit, Bankruptcy Appellate Panel
Delaware Bankruptcy Court Finds Anti-Assignment Clauses in Debt Documents Enforceable in Claim Objection Fight with Postpetition Debt Purchaser

On June 20, 2018, Judge Kevin J. Carey of the United States Bankruptcy Court for the District of Delaware sustained an objection to a proof of claim filed by a postpetition debt purchaser premised on anti-assignment clauses contained in transferred promissory notes. In re Woodbridge Group of Companies, LLC, et al., No. 17-12560, at *14 (jointly administered) (Bankr. D. Del. Jun. 20, 2018).

USA, Delaware, Insolvency & Restructuring, Litigation, Paul, Weiss, Rifkind, Wharton & Garrison LLP
The Ninth Circuit Vacates Bankruptcy Court’s Designation Order, Holding That Purchasing a Subset of Available Claims to Block a Plan, Absent An Ulterior Motive, Does Not Constitute Bad Faith

Summary

USA, Insolvency & Restructuring, Litigation, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Ninth Circuit
Connecticut Bankruptcy Court Holds That Trademark Licensee Does Not Automatically Lose the Right to Use Trademarks When Debtor-Licensor Rejects License, Siding with Seventh Circuit in Circuit Split

The United States Bankruptcy Court for the District of Connecticut recently examined a question at the heart of an existing circuit split regarding the consequences of trademark license rejection in bankruptcy: can a trademark licensee retain the use of a licensed trademark post-rejection? In re SIMA International, Inc., 2018 WL 2293705 (Bankr. D. Conn. May 17, 2018).

USA, Insolvency & Restructuring, Litigation, Trademarks, Paul, Weiss, Rifkind, Wharton & Garrison LLP
Supreme Court Holds That Presence of Financial Conduits Does Not Trigger “Safe Harbor” Protection for Securities-Related Transfers Under Section 546(e) of the Bankruptcy Code

On February 27, 2018, the United States Supreme Court resolved a circuit split regarding the proper application of the safe harbor set forth in section 546(e) of the Bankruptcy Code, a provision that prohibits the avoidance of a transfer if the transfer was made in connection with a securities contract and made by or to (or for the benefit of) certain qualified entities, including a financial institution.

USA, Insolvency & Restructuring, Litigation, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Supreme Court of the United States
Ninth Circuit Holds That Joint Plan Covering Multiple Debtors Must Be Approved by Only One Impaired Class Per Plan, Not One Impaired Class Per Debtor

The Court of Appeals for the Ninth Circuit recently held that section 1129(a)(10) of the Bankruptcy Code – a provision which, in effect, prohibits confirmation of a plan unless the plan has been accepted by at least one impaired class of claims – applies on “per plan” rather than a “per debtor” basis, even when the plan at issue covers multiple debtors. In re Transwest Resort Properties, Inc., 2018 WL 615431 (9th Cir. Jan. 25, 2018). The Court is the first circuit court to address the issue.

USA, Insolvency & Restructuring, Litigation, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Ninth Circuit
Restructuring Department Bulletin - December 2025
USA, Insolvency & Restructuring, Litigation, Paul Weiss Rifkind Wharton & Garrison LLP, Insolvency, Supreme Court of the United States