On October 3, 2017, Bankruptcy Judge Laurie Selber Silverstein of the United States Bankruptcy Court for the District of Delaware issued a decision holding that the Bankruptcy Court had constitutional authority to approve third-party releases in a final order confirming a plan of reorganization.

Section 363 of Title 11 of the United States Code (“Bankruptcy Code”) authorizes trustees (and Chapter 11 debtors-in-possession) to use, sell, or lease property of a debtor’s bankruptcy estate outside of the ordinary course of business upon bankruptcy court approval. Some of the key benefits for purchasers are the ability to purchase assets free and clear of liens under Section 363(f) and obtain protections from adverse consequences of any appeal under Section 363(m).

“You have been served” – the famous phrase uttered by process servers everywhere, may never be heard by a bankruptcy defendant.

Why?

In less than a week after its bankruptcy filing, a debtor was able to obtain confirmation of its prepackaged plan of reorganization in the Bankruptcy Court for the Southern District of New York. In allowing the case to be confirmed on a compressed timeframe that was unprecedented for cases filed in the Southern District of New York, the Bankruptcy Court held that the 28-day notice period for confirmation of a chapter 11 plan could run coextensively with the period under which creditor votes on the plan were solicited prior to the commencement of the bankruptcy case.

What is “redemption” in bankruptcy?

The law on debt restructurings and liability management is back to where it was. Yesterday, the Second Circuit Court of Appeals reversed the controversial District Court decisions in the Marblegate-Education Management bondholder litigation. The case attracted wide-spread attention in financial markets, and we discussed it in an earlier client alert.

At the end of my October blog post, Dear Debtor, You Said I was Your First Priority, a VIP!, I suggested that you might want to join a “support group” called the “Official Committee of Unsecured Creditors” (fondly referred to as the OCC or GUCCs), if you felt angry or depressed about your unsecured claim status. Admittedly, I may have led you astray.

In my May 26th post, I raised several questions that unsecured creditors in any Chapter 11 case should know the answers to and take action where appropriate. One of those questions is “Am I entitled to priority payment?” This is also important to answer in a Chapter 7 case.

The results are in!

As I mentioned in my May 25th blog post, Curtis James Jackson III, better known as rapper 50 Cent (“Jackson”) was scheduled for his bankruptcy confirmation hearing yesterday (July 6th).

In my May 26th post, I raised several questions that unsecured creditors in any Chapter 11 case should know the answers to and take action where appropriate.