In a case of first impression in the Ninth Circuit, the US Court of Appeals recently handed bankruptcy trustees a significant power by ruling in TheLovering Tubbs Trust v. Hoffman (In re O’Gorman) that a trustee can avoid intentionally fraudulent transfers under the Federal Bankruptcy Code, even if no creditor suffered harm as a result.
On August 28, 2024, Judge Gregory B. Williams of the US District Court for the District of Delaware issued a ruling in AIG Financial Products Corporation, Civ. No. 23-573, affirming an order on appeal from the Delaware Bankruptcy Court that denied a motion to dismiss a chapter 11 petition as a bad faith filing.
On July 19, 2024, Judge Michael Wiles of the US Bankruptcy Court for the Southern District of New York issued a ruling in In re Mercon Coffee Corporation, Case No. 23-11945, invalidating insider releases in a proposed chapter 11 plan on the basis that the releases were improper retention-related transfers.
Judge Wiles found that he could not approve the releases – even though the debtors had promised them and insiders had relied upon that promise – because the releases did not meet the strict requirements of Bankruptcy Code Section 503(c).
They say every man needs protection, they say that every man must fall.1
Bankruptcy Code Section 502(b)(6) establishes a Statutory Cap on the damages a landlord can claim arising from the termination of a lease in bankruptcy case. Courts have split on how to calculate the Statutory Cap, whether and how to apply letters of credit to reduce the Statutory Cap, and whether the Statutory Cap applies to a landlord’s claims against a lessee’s debtor-guarantor.
On March 26, 2024, the US District Court for the Southern District of New York issued an opinion addressing the foregoing issues:
On March 15, 2024, the US Court of Appeals for the Seventh Circuit issued a ruling that broadly applied the “safe harbor” provision of section 546(e) of the Bankruptcy Code to insulate from state and federal fraudulent transfer attack certain transactions involving private securities. Petr, Trustee for BWGS, LLC v. BMO Harris Bank, N.A. and Sun Capital Partners VI, L.P., No. 23-1931, 2024 WL 1132170 (7th Cir. 2024). The court addressed two questions of first impression in the Seventh Circuit:
Summary
In the first appeal of a restructuring plan under Part 26A Companies Act 2006, the English Court of Appeal unanimously set aside the first instance decision sanctioning the plan proposed by AGPS BondCo PLC, part of the Adler real estate group1.
On March 11, 2024, Judge Colm F.
On December 12, 2023, in the case of In re Envision Healthcare Corp., Case No. 23-90342, Judge Christopher M. López of the US Bankruptcy Court for the Southern District of Texas determined that Section 541 of the Bankruptcy Code conflicts directly with, and therefore trumps, Section 18-304 of the Delaware LLC Act to prevent the termination of a member’s interests in a Delaware limited liability company arising from such member’s bankruptcy filing.
Summary of Section 18-304 of the Delaware Limited Liability Company Act (LLC Act)
Summary
Trustees and officeholders (such as administrators, receivers and liquidators) can ask the Court to approve steps that they propose to take in the administration of their estate (such as the sale of an asset or settlement of a claim).