In Henry Hobbs Jr. v. Buffets LLC the United States Court of Appeals for the Fifth Circuit upheld the constitutionality of a recent increase in United States Trustees fees that are charged to Chapter 11 debtors.

In its October 22, 2020, CNH Diversified Opportunities Master Account, L.P. v.

BJ Services, a Texas-based provider of hydraulic fracturing (i.e., “fracking”) and cementing services for upstream oil and gas companies, filed for chapter 11 protection on July 20, 2020, in the US Bankruptcy Court for the Southern District of Texas, along with three of its affiliates. Their chapter 11 filings were prompted by unsuccessful restructuring negotiations with one of their equity sponsors—CSL Capital Management—which would have provided a $75 million new money investment, including $30 million in the form of DIP financing, in exchange for the majority of the reorganized equity.

Can state regulatory agencies move ahead with lawsuits against businesses who file for bankruptcy in order to enforce consumer protection and business laws, or does the automatic stay’s broad injunctive sweep capture those actions? The answer depends on whether the state is acting in its regulatory capacity or simply like another creditor – and the distinction is not always clear.

Since filing for Chapter 11 in May 2020, Hertz and its major stakeholders have been in negotiations and, at times, disputes over how best to reduce Hertz’s nearly half-a-million vehicle fleet. These negotiations and disputes have caught the eye of investors in asset-backed securities (“ABS”) and market watchers alike, as the outcome of the case could have rippling effects across the ABS industry and capital markets, generally.

As discussed in earlier posts,¹ substantial uncertainty exists over whether companies in bankruptcy are eligible to pursue funding pursuant to the SBA’s Paycheck Protection Program, or PPP, which was established by the CARES Act to support small businesses by offering SBA-guaranteed loans on advantageous terms.

As discussed in an earlier Legal Update,¹ substantial uncertainty exists over whether companies in bankruptcy are eligible for loans under the Paycheck Protection Program, or PPP, which was established by the CARES Act to support small businesses by offering SBA-guaranteed loans on advantageous terms. Several recent bankruptcy court decisions underscore this uncertainty.

Die weltweite Ausbreitung des Coronavirus sorgt für heftige Turbulenzen im Wirtschaftsleben. Gerät eine GmbH in finanzielle Schieflage, steht besonders die Geschäftsführung unter Druck. Sie kämpft um das wirtschaftliche Überleben der Gesellschaft. Gleichzeitig kommen verschiedene Szenarien für die Haftung des Geschäftsführers in Betracht, wenn dieser keine Krisenprävention durchgeführt hat oder in der Krise nicht die erforderliche Sorgfalt anwendet.

Haftung wegen unzureichender Krisenprävention

The coronavirus pandemic is sending shock waves through the business world. If a GmbH (German limited liability company) finds itself in financial distress, the management in particular will be under pressure and must fight for the survival of the business. At the same time, there are various scenarios in which managing directors could be held liable for not implementing crisis prevention measures or exercising the necessary diligence during the crisis.

Liability for inadequate crisis prevention

As courts across the country deal with scaled back operations due to the COVID-19 pandemic, bankruptcy courts in New Jersey and Delaware have issued novel orders to address the impact of the virus on certain debtors. Last month, debtors in the chapter 11 bankruptcy cases of Modell’s Sporting Goods, Inc. and CraftWorks Parent, LLC each sought and obtained court orders suspending certain case activity which, for all intents and purposes “mothballed” the cases for a certain period of time.