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Just “Released” by the Third Circuit: In re Millennium Lab Holdings II Key Takeaways

In a highly anticipated decision issued last Thursday (on December 19, 2019), the United States Court of Appeals for the Third Circuit held in In re Millennium Lab Holdings II, LLC that a bankruptcy court may constitutionally confirm a chapter 11 plan of reorganization that contains nonconsensual third-party releases. The court considered whether, pursuant to the United States Supreme Court’s decision in Stern v. Marshall, 564 U.S. 462 (2011), Article III of the United States Constitution prohibits a bankruptcy court from granting such releases.

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, United States bankruptcy court
Exit lenders liable for conversion where distributions contravene credit agreement

Prudential Insurance Company of America v. WestLB AG, 961 N.Y.S. 2d 360 (2012)

CASE SNAPSHOT

USA, Banking, Insolvency & Restructuring, Litigation, Reed Smith LLP, Credit (finance), Collateral (finance)
Seventh Circuit rules rejection of executory trademark license does not terminate the license, creates a split of authority

Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC, 686 F.3d 372 (7th Cir. 2012)

CASE SNAPSHOT

In a matter of first impression in the Seventh Circuit, the court held that a chapter 7 trustee’s rejection of an executory contract did not terminate the trademark license contained therein.

FACTUAL BACKGROUND

USA, Insolvency & Restructuring, Litigation, Trademarks, Reed Smith LLP, Bankruptcy, Seventh Circuit
Subtenant retains possessory rights under section 365(h) despite explicit free and clear section 363(f) sale

In re Zota Petroleums, LLC, 482 B.R. 154 (Bankr. E.D. Va. 2012)

CASE SNAPSHOT

USA, Virginia, Insolvency & Restructuring, Litigation, Real Estate, Reed Smith LLP
Determining whether a chapter 11 plan is unconfirmable without a confirmation hearing

In re American Capital Equipment, LLC, 688 F.3d 145 (3d Cir. 2012)

CASE SNAPSHOT

USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Discovery, Due process, Leveraged buyout, Secured creditor, United States bankruptcy court, Third Circuit
A defendant may have a complete defense to a commercial claim where a plaintiff has failed to disclose the claim in a prior discharged bankruptcy

When being sued, corporate and individual defendants should always confirm that the plaintiff has not been previously discharged in bankruptcy and failed to disclose the claim in the proceeding as an asset of the bankruptcy estate. In Guay v. Burack, 677 F.3d 10 (1st Cir. 2012), the plaintiff brought numerous claims against various governmental entities, governmental officials and a police officer.

USA, Insolvency & Restructuring, Litigation, Masuda Funai Eifert & Mitchell Ltd, Bankruptcy, Debt
Substantive consolidation order not automatically retroactive absent language to the contrary

Giuliano v. Shorenstein Company, LLC (In re Sunset Aviation, Inc.), Adv. No. 11- 50965, Bankr. No. 09-10778, 2011 WL 4002429 (Bankr. D. Del. Sept. 7, 2011)  

CASE SNAPSHOT

USA, Delaware, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor, Limited liability company, Ex post facto law, United States bankruptcy court, Sixth Circuit, US District Court for District of Delaware
Cross-affiliate netting provision in ISDA swap agreement is not enforceable against the debtor

In re Lehman Brothers Inc., Bankr. Case No. 08-01420 (JMP) (SIPA), 2011 WL 4553015 (Bankr. S.D.N.Y. Oct. 4, 2011)  

CASE SNAPSHOT

USA, Derivatives, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor, Debt, UBS, International Swaps and Derivatives Association, Lehman Brothers, Title 11 of the US Code, United States bankruptcy court
Recent significant commercial bankruptcy filings

Masuda, Funai, Eifert & Mitchell routinely represents creditors in bankruptcy proceedings in order to protect their contractual and legal interests and rights to payment. The following is a list of some recent larger U.S. bankruptcy filings in various industries. To the extent you are a creditor to any of these debtors, or other entities which may have filed for bankruptcy protection, you as a creditor are entitled to certain protections under the Bankruptcy Code.

AUTOMOTIVE

USA, Insolvency & Restructuring, Masuda Funai Eifert & Mitchell Ltd, Bankruptcy, Debtor, Unsecured debt, Option (finance), Title 11 of the US Code, United States bankruptcy court
Split in courts continues—private stock purchase payments not protected by Section 546 safe harbor

Geltzer v. Mooney (In re MacMenamin’s Grill Ltd.), Adv. Case. No. 09-8266, Bankr. Case No. 08-23660, 2011 WL 1549056 (Bankr. S.D.N.Y. Apr. 21, 2011)

CASE SNAPSHOT

USA, New York, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Shareholder, Debtor, Security (finance), Fraud, Safe harbor (law), Writ, Leveraged buyout, Systemic risk, Secured loan, Title 11 of the US Code, Trustee, United States bankruptcy court