Part 1 – Celsius Bankruptcy

The novel coronavirus COVID-19 pandemic has the potential to impact the U.S. economy at a level which could ultimately rival or surpass the global financial crisis of 2009. Reports from commercial landlords suggest that a majority of retail and restaurant tenants, perhaps as many as 75%, failed to make payments of rent due on April 1^st.

Courts are often faced with the situation in which affiliated debtors file for Chapter 11 reorganization and request to have their cases jointly administered. While joint administration does not, without more, cause substantive consolidation of the assets and liabilities of the corporate group, jointly-administered debtors may propose a single plan of reorganization that establishes the recovery for all of the debtors’ creditors.

The true effects of the events of the last few days have yet to be seen. With the mainstream political parties acting like participants in a ‘Compose a Greek Tragedy’ competition, a government unlikely to exercise any meaningful executive functions until autumn (at least), the currency and financial markets in turmoil and the future uncertain on a range of factors, it is tempting to succumb to a condition of inaction whilst waiting to see how the cards fall.

BACKGROUND

The United States Court of Appeals for the Second Circuit (the “Second Circuit”) recently followed the emerging trend of affording the safe harbor protections of section 546(e) of the Bankruptcy Code (the “Code”) to intermediary financial institutions acting as only conduits in otherwise voidable transactions.

Introduction

Introduction

Introduction

Introduction