Given the recent media coverage and growing concerns among investors over the risks associated with a bankruptcy filing of a cryptocurrency exchange, it feels timely to highlight some issues that arose in the Chapter 11 cases of Cred Inc. and certain of its affiliates (collectively, “Cred”).

Overview

The Bankruptcy Protector

Considerations of “environmental, social and governance” (or ESG) criteria with respect to a company’s management and operations continue to take on greater importance in lenders’ and investors’ credit and investment decisions. How a borrower or a target company measures up to these ever-developing ESG standards will impact its cost of capital and value to potential investors and acquirors.

The Bankruptcy Protector

Back in July, Craig Eller wrote in The Bankruptcy Protector about the continuing confusion amongst courts and litigants regarding the applicability of a 2018 increase in fees payable to the Office of the United States Trustee in chapter 11 cases.

The Bankruptcy Protector

In City of Chicago, Illinois v. Fulton, No. 19-357, 2021 WL 125106, at *1 (U.S. Jan. 14, 2021), the United States Supreme Court considered the issue of whether the mere retention of estate property after the filing of a bankruptcy petition violates section 362(a)(3) of the Bankruptcy Code. Reversing the Seventh Circuit and resolving a split among the circuits, the Supreme Court ruled unanimously on January 14, 2021 “that mere retention of property does not violate the [automatic stay in] § 362(a)(3).”

Bankruptcy experts are applauding a proposed change to the Paycheck Protection Program that will allow small business debtors to access loans under federal COVID-19 relief packages, correcting what they say was a mistake in early versions of the aid program that left bankrupt companies without a valuable tool for surviving the pandemic.

On June 22, U.S. Circuit Judge Judge Jerry Smith issued a short, three-page opinion in the case Hidalgo County Emergency Service Foundation v. Carranza that appeared, at first blush, to be a death blow to many debtors' ability to obtain Paycheck Protection Program, or PPP, loans under the Coronavirus Aid, Relief and Economic Security, or CARES, Act.

In Lane v. Bank of New York Mellon (In re Lane), No. 18-60059, 2020 WL 2832270 (9th Cir. June 1, 2020), the United States Court of Appeals for the Ninth Circuit was asked to decide whether a bankruptcy court may void a lien under section 506(d) of the Bankruptcy Code when a claim relating to the lien is disallowed because the creditor who filed the proof of claim did not prove that it was the person entitled to enforce the debt the lien secures. Employing a narrow reading of section 506(d), the Ninth Circuit answered the question in the negative.