In Matter of J.C. Penney Direct Marketing Services, L.L.C.,¹ the United States Fifth Circuit Court of Appeals clarified the extremely deferential standard afforded to a debtor’s “business judgment” decision to reject an unexpired lease under section 365 of the Bankruptcy Code and affirmed the Bankruptcy Court’s ruling allowing rejection of a ground lease notwithstanding allegations of a debtor-sublessor’s bad faith dealings in its negotiations with a sublessee.

Background

Federal district courts, with the consent of the parties, are authorized by statute to refer "civil matter[s]" to magistrate judges for the purpose of conducting all proceedings and entering a judgment in the litigation. In the case of an appeal to a district court from a bankruptcy court, however, this statutory authority arguably conflicts with another statutory provision dictating that appeals from a bankruptcy court order or judgment be heard by a "district court" or a "bankruptcy appellate panel." This apparent conflict was recently addressed by the U.S.

On July 29, 2022, Laurie S.

The Supreme Court of the United States granted certiorari on June 27, 2022, to determine whether section 363(m) of the Bankruptcy Code—concerning appellate review of bankruptcy court sale orders—is jurisdictional or only limits the remedy an appellate court may fashion. This issue has split the circuit courts of appeals. The case is set for oral argument in the October 2022 term.

To promote the finality and binding effect of confirmed chapter 11 plans, the Bankruptcy Code categorically prohibits any modification of a confirmed plan after it has been "substantially consummated." Stakeholders, however, sometimes attempt to skirt this prohibition by characterizing proposed changes to a substantially consummated chapter 11 plan as some other form of relief, such as modification of the confirmation order or a plan document, or reconsideration of the allowed amount of a claim. The U.S.

Perhaps surprisingly given the rarity of such cases, a handful of high-profile court rulings recently have addressed whether a solvent chapter 11 debtor is obligated to pay postpetition, pre-effective date interest ("pendency interest") to unsecured creditors to render their claims "unimpaired" under a chapter 11 plan and, if so, at what rate.

Supreme Court to Resolve Circuit Split on Constitutionality of U.S. Trustee Fee Hike

When existing interest holders attempt to retain ownership of a chapter 11 debtor after confirmation of a nonconsensual plan of reorganization, the Bankruptcy Code's plan confirmation requirements, including well-established rules regarding the classification and treatment of creditor claims and equity interests, can create formidable impediments to their reorganization strategy. In In re Platinum Corral, LLC, 2022 WL 127431 (Bankr. E.D.N.C. Jan. 13, 2022), the U.S.

On February 3, 2022, as part of a series of recent decisions addressing third-party releases, Bankruptcy Judge John T.

The finality of sales of assets in bankruptcy is an indispensable feature of U.S. bankruptcy law, designed to maximize the value of a bankruptcy estate as expeditiously as possible for the benefit of all stakeholders. Promoting the finality of bankruptcy asset sales is the Bankruptcy Code's prohibition of reversal or modification on appeal of an order approving a sale to a good-faith purchaser unless the party challenging the sale obtains a stay pending appeal. This bar of appellate review is commonly referred to as "statutory mootness."