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New York Bankruptcy Court: Lockup Provision in Proposed Settlement Agreement Violated Bankruptcy Code's Disclosure and Solicitation Requirements

A bedrock principle underlying chapter 11 of the Bankruptcy Code is that creditors, shareholders, and other stakeholders should be provided with adequate information to make an informed decision to either accept or reject a chapter 11 plan. For this reason, the Bankruptcy Code provides that any "solicitation" of votes for or against a plan must be preceded or accompanied by stakeholders' receipt of a "disclosure statement" approved by the bankruptcy court explaining the background of the case as well as the key provisions of the chapter 11 plan.

USA, New York, Insolvency & Restructuring, Litigation, Jones Day, Bankruptcy
In re Purdue Pharma L.P.: Second Circuit Reverses S.D.N.Y and Holds Bankruptcy Court Has Subject Matter Jurisdiction and Statutory Authority to Approve Sackler Family Releases

On May 30, 2023, the United States Court of Appeals for the Second Circuit (the “Second Circuit” or the “Court”) rendered a much anticipated opinion (the “Opinion”),1 reversing the order of the United States District Court for the Southern District of New York (the “District Court”) that the Bankruptcy Code does not permit non-consensual third-party releases of direct claims and affirming the order of the United States Bankruptcy Court for the Southern District of New York (the

USA, Company & Commercial, Insolvency & Restructuring, Litigation, Vinson & Elkins LLP, Supreme Court of the United States, Second Circuit, United States bankruptcy court, US District Court for the Southern District of New York
In re Boy Scouts of America and Delaware BSA, LLC: Delaware District Court Affirms Bankruptcy Court’s Approval of Third-Party Releases, in Conflict with Southern District of New York District Court in Purdue

On March 28, 2023, the United States District Court for the District of Delaware (the “District Court”) rendered an opinion (the “Opinion”)1 affirming the confirmation order of Laurie S.

USA, Delaware, Company & Commercial, Insolvency & Restructuring, Litigation, Vinson & Elkins LLP, United States bankruptcy court, US District Court for District of Delaware
U.S. Supreme Court Rules Appellate Protection of Bankruptcy Property Sale Is Subject to Waiver and Estoppel

In Short

The Situation: The U.S. Supreme Court considered whether § 363(m) of the Bankruptcy Code, which limits a party's ability to undo an asset transfer made to a good-faith purchaser in a bankruptcy case, is jurisdictional.

USA, Insolvency & Restructuring, Litigation, Jones Day, US Congress, Supreme Court of the United States
Default Under Assumed Lease Need Not Be Material or Ongoing to Trigger Landlord's Entitlement to Adequate Assurance of Future Performance

The ability of a bankruptcy trustee or chapter 11 debtor-in-possession ("DIP") to assume, assume and assign, or reject executory contracts and unexpired leases is an important tool designed to promote a "fresh start" for debtors and to maximize the value of the bankruptcy estate for the benefit of all stakeholders. However, the Bankruptcy Code establishes strict requirements for the assumption or assignment of contracts and leases.

USA, Insolvency & Restructuring, Litigation, Real Estate, Jones Day
CFIUS Takes Notice of Crypto Company Bankruptcy Sale, Signaling Heightened CFIUS Attention to Bankruptcy-Related Transactions

In a provocative demonstration that it scrutinizes all types of transactions, no matter their origin, the Committee on Foreign Investment in the United States (“CFIUS”) has reportedly been vetting the proposed $1 billion sale of bankrupt crypto lender Voyager Digital’s assets to Binance.US. Voyager Digital filed for Chapter 11 bankruptcy in July 2022, and, after an initial agreement to sell its assets to FTX crumbled, Binance.US provided Voyager Digital with the winning offer for its assets in December 2022. But, after the sale’s announcement on December 30, 2022, the U.S.

USA, Banking, Corporate Finance/M&A, Insolvency & Restructuring, IT & Data Protection, Vinson & Elkins LLP, Bankruptcy, Cryptocurrency, Anti-money laundering, US Department of Justice, Committee on Foreign Investment in the United States, FTX
Another Delaware Bankruptcy Court Approves Third-Party Releases and Opt-Out Mechanisms Amidst Disagreements with Other Circuits

On July 29, 2022, Laurie S.

USA, Delaware, Company & Commercial, Insolvency & Restructuring, Litigation, Vinson & Elkins LLP, Bankruptcy, United States bankruptcy court, Third Circuit, US District Court for the Southern District of New York
In Brief: U.S. Supreme Court Declines Review of High-Profile Bankruptcy Rulings

Madoff

USA, Insolvency & Restructuring, Litigation, Jones Day, Supreme Court of the United States, Second Circuit
U.S. Supreme Court Declines Review of Landmark Tribune Safe Harbor Ruling

On April 19, 2021, the U.S. Supreme Court declined to hear the appeal of a landmark 2019 decision issued by the U.S. Court of Appeals for the Second Circuit regarding the applicability of the Bankruptcy Code's safe harbor for certain securities, commodity, or forward contract payments to prevent the avoidance in bankruptcy of $8.3 billion in payments made to the shareholders of Tribune Co. as part of its 2007 leveraged buyout ("LBO").

USA, Derivatives, Insolvency & Restructuring, Litigation, Jones Day, Safe harbor (law), Supreme Court of the United States, Second Circuit
Texas Bankruptcy Court Allows Make-Whole Premium as Liquidated Damages and Requires Solvent Chapter 11 Debtor to Pay Postpetition Interest

On October 26, 2020, the U.S. Bankruptcy Court for the Southern District of Texas issued a long-awaited ruling on whether natural gas exploration and production company Ultra Petroleum Corp. ("UPC") must pay a make-whole premium to noteholders under its confirmed chapter 11 plan and whether the noteholders are entitled to postpetition interest on their claims pursuant to the "solvent-debtor exception." On remand from the U.S.

USA, Texas, Insolvency & Restructuring, Litigation, Jones Day, Fifth Circuit, US District Court for Southern District of Texas