The U.S. Supreme Court has ruled that bankruptcy filers cannot avoid debt incurred by another’s fraud.
The 9-0 ruling, written by Justice Amy Coney Barrett, unanimously rejected Kate Bartenwerfer's bid to use U.S. bankruptcy code protection to eliminate debts on the grounds that she was unaware of fraudulent omissions made by her husband.
We recently reported on Delaware Judge Christopher Sontchi’s decision in the Extraction bankruptcy to permit the rejection of midstream gathering agreements.1 Fellow Delaware Judge Karen Owens followed Extraction in the Southland Royalty decision issued November 13, 2020.2 Judge Owens determined that Southland Royalty Company, LLC (“Southland”), an E&P operator with assets primarily in Wyoming, could reject the gas gathering agreement and sell its assets free and clear of the agreement.
In the latest saga concerning “covenants running with the land” and the rejection of midstream gathering agreements under section 365 of the Bankruptcy Code (the Code), the Honorable Christopher Sontchi, Chief Judge of the Delaware Bankruptcy Court (the Court), issued three1 decisions holding that certain of Extraction Oil & Gas, Inc.’s (Extraction) gathering agreements with its midstream service providers did not create real property interests and, thus, that Extraction could reject such gathering agreements in its chapter 11 bankruptcy proceedings.
Guiding a business as a chief executive officer is difficult in the best of times. In the midst of a pandemic, uncertainty is rampant. However, in that uncertainty often times there is opportunity.
Sometimes Chapter 11 is a viable and appropriate strategy for an organization to right size its balance sheet and adjust its long term contracts. CEO's must adapt to changing circumstances. Careful consideration of the impacts - both positive and negative - of Chapter 11 can be critical to guiding an organization and in some cases, it may allow a business to thrive.
J.C. Penney filed chapter 11 the evening of Friday, May 15, 2020. Hearings on the case were commenced on the next day - a Saturday. Several lawyers on the call suggested to the court that it was the first time they had ever appeared on a weekend. Hundreds of people participated in the hearing. And, in fact, one of the participants was an individual small shareholder of the company.
Where was this hearing? The answer is everywhere and nowhere at the same time. Each participant appeared remotely. Exhibits were posted for everyone to review online at join.me.
“[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).
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]
An asset purchaser’s payments into segregated accounts for the benefit of general unsecured creditors and professionals employed by the debtor (i.e., the seller) and its creditors’ committee, made in connection with the purchase of all of the debtor’s assets, are not property of the debtor’s estate or available for distribution to creditors according to the U.S. Court of Appeals for the Third Circuit — even when some of the segregated accounts were listed as consideration in the governing asset purchase agreement. ICL Holding Company, Inc., et al. v.