It may be fair to say that non-US entities involved in a chapter 15 case, the mechanism through which US courts recognize foreign insolvency proceedings, do not anticipate having to litigate claims raised in the chapter 15 case outside of the bankruptcy court. This may be due in large part to 28 U.S.C. § 1334(c)(1), an abstention statute applicable in chapter 15 bankruptcy proceedings.

On November 11, 2022, FTX, the world’s third-largest cryptocurrency exchange, filed for Chapter 11 bankruptcy protection in the United States. Reports suggest that the exchange might have a shortfall of as much as US$8 billion. The collapse has sent shockwaves through the cryptocurrency market, undermined investor confidence and led to renewed calls for authorities to accelerate the implementation of fit-for-purpose regulations.

Chapter 11 Bankruptcy

On December 12, 2019, the US Court of Appeals for the Sixth Circuit issued a highly anticipated ruling in theFirstEnergy Solutions Corp. bankruptcy case, regarding the efforts of FirstEnergy Solutions Corp. (FirstEnergy or FES) to reject certain wholesale power purchase contracts.

On February 16, 2018, the US District Court for the Southern District of Texas issued an opinion that may prove important for non-defaulting parties to trading contracts. In an appeal arising out of the Linn Energy bankruptcy, the district court held that a party seeking to terminate a safe-harbor contract pursuant to section 556 of the Bankruptcy Code is not restricted by any time limitation, and therefore does not waive its safe-harbor rights if it fails to terminate the contract within a certain amount of time.

The 2005 amendments to the Bankruptcy Code included the addition of an administrative expense claim for the value of goods received by the debtor in the 20 days prior to the bankruptcy filing. The allowance of an administrative expense priority—which generally garners payment in full—for a prepetition claim was a break from tradition and a significant boon to suppliers of goods. For that same reason, however, debtors have had an incentive to fight against the magnitude of such claims in any way possible.

“[C]ourts may account for hypothetical preference actions within a hypothetical [C]hapter 7 liquidation” to hold a defendant bank (“Bank”) liable for a payment it received within 90 days of a debtor’s bankruptcy, held the U.S. Court of Appeals for the Ninth Circuit on March 7, 2017.In re Tenderloin Health, 2017 U.S. App. LEXIS 4008, *4 (9th Cir. March 7, 2017).

On March 10, 2017, the U.S. District Court for the Southern District of New York issued a Memorandum Order, in which it affirmed a controversial bankruptcy court ruling. The district court agreed with the bankruptcy court that Sabine Oil & Gas Corp., an upstream oil and gas producer, could reject a number of its gathering contracts with midstream energy companies.

The Federal Rules of Bankruptcy Procedure (“Bankruptcy Rules”) require each corporate party in an adversary proceeding (i.e., a bankruptcy court suit) to file a statement identifying the holders of “10% or more” of the party’s equity interests. Fed. R. Bankr. P. 7007.1(a). Bankruptcy Judge Martin Glenn, relying on another local Bankruptcy Rule (Bankr. S.D.N.Y. R.

A Chapter 11 debtor “cannot nullify a preexisting obligation in a loan agreement to pay post-default interest solely by proposing a cure,” held a split panel of the U.S. Court of Appeals for the Ninth Circuit on Nov. 4, 2016. In re New Investments Inc., 2016 WL 6543520, *3 (9th Cir. Nov. 4, 2016) (2-1).

While a recent federal bankruptcy court ruling provides some clarity as to how midstream gathering agreements may be treated in Chapter 11 cases involving oil and gas exploration and production companies (“E&Ps”), there are still many questions that remain. This Alert analyzes and answers 10 important questions raised by the In re Sabine Oil & Gas Corporation decision of March 8, 2016.[1]