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Fifth Circuit Rules on the "Solvent-Debtor Exception" and Make-Whole Premiums

On October 14, 2022, the U.S. Court of Appeals for the Fifth Circuit issued a long-awaited ruling on whether Ultra Petroleum Corp.

USA, Company & Commercial, Insolvency & Restructuring, Litigation, Jones Day, US Congress, United States bankruptcy court, Fifth Circuit, U.S. Court of Appeals
Fifth Circuit Rules on the "Solvent-Debtor Exception" and Make-Whole Premiums

In Short

The Situation: Courts have disagreed over whether a make-whole premium triggered by a borrower's bankruptcy filing must be disallowed as unmatured interest. They have also disputed whether the "solvent-debtor exception" requiring the payment of postpetition interest to unimpaired unsecured creditors of a solvent debtor survived the enactment of the Bankruptcy Code. Finally, courts have split on what rate of postpetition interest unimpaired unsecured creditors of a solvent debtor are entitled to receive.

USA, Insolvency & Restructuring, Litigation, Jones Day, US Congress, Fifth Circuit
Divided Ninth Circuit Rules That Unimpaired Unsecured Creditors of a Solvent Debtor May Be Entitled to Post-Petition Interest at Contract or State Default Rates

In Short

The Situation: Bankruptcy courts have split on what rate of post-petition interest unimpaired creditors of a solvent debtor are entitled to receive. Bankruptcy courts have variously ruled that such creditors were entitled to the contractual rate of interest, interest at the federal judgment rate (about the rate on a one-year Treasury bill) as of the bankruptcy petition date, or an equitable rate. Another possibility is that no interest is payable at all.

USA, Insolvency & Restructuring, Litigation, Jones Day, Supreme Court of the United States, Ninth Circuit
No “Stranger” to the Proceeding: CCAA Court Reaffirms Single Proceeding Model

The single proceeding model, which is a core tenet in insolvency proceedings, was recently reaffirmed in the Companies’ Creditors Arrangement Act (“CCAA”) proceedings of Bloom Lake in Re Bloom Lake, 2021 QCCS 3402.

Canada, Quebec, Insolvency & Restructuring, Litigation, Thornton Grout Finnigan, Coronavirus, Companies' Creditors Arrangement Act 1933 (Canada)
Top Insolvency Cases and Highlights from 2017 - Part 2

We previously published Part 1 of our survey of interesting and important developments in Canadian insolvency and restructuring matters in 2017. This post is the second and final part – with an additional seven highlights and cases. You can also find a printable version containing the complete “Top Insolvency Cases and Highlights from 2017” bulletin on our website.

Canada, Insolvency & Restructuring, Litigation, McCarthy Tétrault LLP, Bankruptcy, Supreme Court of Canada, Court of Appeal of Alberta, Quebec Court of Appeal
Top Insolvency Cases and Highlights from 2017 - Part 1

2017 saw a number of interesting and important developments in Canadian insolvency and restructuring matters. Some of the highlights (which, in certain instances, will continue as issues in 2018 and beyond) are set forth below:

1) Trends: Fewer CCAA Filings and Retail Insolvencies in the News

Canada, Ontario, Quebec, Insolvency & Restructuring, Litigation, McCarthy Tétrault LLP, Bankruptcy, Liquidation, Secured creditor, Office of the Superintendent of Financial Institutions (Canada), Bankruptcy and Insolvency Act 1985 (Canada), Supreme Court of Canada, Court of Appeal for Ontario
Whirlpool Corporation v. HHGreg, Inc. (In re HHGregg, Inc.)

(Bankr. S.D. Ind. Dec. 4, 2017)

The bankruptcy court grants the motion to dismiss, finding the defendant’s security interest in the debtor’s assets, including its inventory, has priority over the plaintiff’s reclamation rights. The plaintiff sold goods to the debtor up to the petition date and sought either return of the goods delivered within the reclamation period or recovery of the proceeds from the sale of such goods. Pursuant to 11 U.S.C. § 546(c), the Court finds the reclamation rights are subordinate and the complaint should be dismissed. Opinion below.

USA, Insolvency & Restructuring, Litigation, Stoll Keenon Ogden PLLC, Debtor, United States bankruptcy court
In re Dickson

(Bankr. E.D. Ky. Nov. 22, 2017)

USA, Kentucky, Insolvency & Restructuring, Litigation, Stoll Keenon Ogden PLLC
Bankruptcy opinions within a day or two of issuance from the Western and Eastern Districts of Kentucky, the Northern and Southern Districts of Indiana, the Sixth and Seventh Circuits, and the U.S. Supreme Court

(B.A.P. 6th Cir. Nov. 28, 2017)

The Sixth Circuit B.A.P. affirms the bankruptcy court’s dismissal of the Chapter 12 bankruptcy case. The court finds that the bankruptcy court failed to give the debtor proper notice and opportunity to be heard prior to the dismissal. However, the violation of due process was harmless error. The delay in filing a confirmable plan and continuing loss to the estate warranted the dismissal. Opinion below.

Judge: Preston

Attorney for Appellant: Heather McKeever

USA, Insolvency & Restructuring, Stoll Keenon Ogden PLLC, Bankruptcy, Supreme Court of the United States, United States bankruptcy court, Sixth Circuit, Seventh Circuit
Proposed Amendments to Insolvency Legislation Granting Super-priority to Pension Plan Deficits and Employee Benefits

This fall, the NDP and the Bloc Québécois (“Bloc”) have both introduced private member’s bills seeking to amend the Bankruptcy and Insolvency Act(“BIA”) and the Companies’ Creditors Arrangement Act (“CCAA”).

Canada, Quebec, Employee Benefits & Pensions, Insolvency & Restructuring, Litigation, McCarthy Tétrault LLP, Bankruptcy, Unemployment benefits, Canada Pension Plan Act 1985, Bankruptcy and Insolvency Act 1985 (Canada)