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The Eleventh Circuit Rules that US Assets are not Required for Chapter 15 Eligibility

On April 3, 2024, the Eleventh Circuit Court of Appeals (comprised of Federal Courts in Alabama, Florida and Georgia), affirmed the decision of the District Court for the Middle District of Florida in Al Zawawi v. Diss (In re Al Zawawi). The Court held that eligibility requirements for a “debtor” contained in section 109(a) of the Bankruptcy Code do not apply to foreign recognition proceedings under chapter 15 of the Bankruptcy Code.

USA, Insolvency & Restructuring, Litigation, Fried Frank Harris Shriver & Jacobson LLP, Supreme Court of the United States, Eleventh Circuit
Review of Target Board LBO Practices May Be Warranted Based on the Nine West Decision-But We Believe the Decision’s Impact Has Been Overstated

Business headlines have warned of a potential “chilling effect on buyouts” as a result of the decision recently issued by the U.S. District Court for the Southern District of New York in In re: Nine West LBO Securities Litigation (Dec. 4, 2020). Contrary to the views of some other commentators on the decision, we do not believe that the decision is likely to chill leveraged buyout activity, to upend how LBOs have been conducted, or to significantly increase the potential of liability for target company directors selling the company in an LBO.

USA, Company & Commercial, Corporate Finance/M&A, Insolvency & Restructuring, Litigation, Fried Frank Harris Shriver & Jacobson LLP, Private equity, Leveraged buyout, US District Court for the Southern District of New York
Director fiduciary duties in an insolvency context

With businesses focused on the impact of the novel coronavirus (COVID-19) pandemic on current and future liquidity, balance sheet and cash flow concerns, and an expected decline in the level and profitability of business activity in these difficult and uncertain times, in many cases attention has turned to the issue of the duties and responsibilities of directors to creditors when a corporation is financially troubled and is either approaching insolvency (the so-called “zone of insolvency”) or becomes insolvent.

USA, Delaware, Corporate Finance/M&A, Insolvency & Restructuring, Litigation, Fried Frank Harris Shriver & Jacobson LLP, Shareholder, Fiduciary, Coronavirus
Third Circuit Permits Debtor to Reject Expired Collective Bargaining Agreement

On January 15, 2016, the United States Court of Appeals for the Third Circuit (the “Third Circuit”) held in In re Trump Entertainment Resorts that section 1113 of the Bankruptcy Code permits a debtor to reject an expired collective bargaining agreement (“CBA”).

USA, Insolvency & Restructuring, Litigation, Fried Frank Harris Shriver & Jacobson LLP, Debtor, UNITE HERE
Third Circuit permits the use of structured dismissals that deviate from the Bankruptcy Code’s priority scheme

On May 21, 2015, the United States Court of Appeals for the Third Circuit (the “Third Circuit”) affirmed the order of the United States District Court for the District of Delaware in Official Committee of Unsecured Creditors v. CIT Group/Business Credit Inc. (In re Jevic Holding Corp.) approving a settlement and dismissal of a chapter 11 case by way of a “structured dismissal.” A structured dismissal is, simply, the dismissal of the bankruptcy case preceded by other orders, such as an order approving a settlement or granting releases, which survive dismissal of the case.

USA, Delaware, Insolvency & Restructuring, Litigation, Fried Frank Harris Shriver & Jacobson LLP, United States bankruptcy court, Third Circuit
Supreme Court rules that an order denying confirmation of a chapter 13 plan is not a final appealable order

On May 4, 2015, the Supreme Court of the United States affirmed the order of the United States Court of Appeals for the First Circuit dismissing the appeal of chapter 13 debtor Luis Bullard for lack of jurisdiction.1 The Court held that the order of the Bankruptcy Court denying confirmation of Bullard’s proposed chapter 13 plan was not a final order from which Bullard could immediately appeal as of right.2 The Court reasoned that, while confirmation of a plan can be said to fix the rights and obligations of the parties in a way that alters the status quo, d

USA, Insolvency & Restructuring, Litigation, Fried Frank Harris Shriver & Jacobson LLP, Debtor, United States bankruptcy court, First Circuit
Bankruptcy Court in Delaware rules Caesars’ bankruptcy cases belong in Chicago despite involuntary petition in Delaware

In a battle over proper venue for the chapter 11 cases of In re Caesars Entertainment Operating Company, Inc.

USA, Delaware, Insolvency & Restructuring, Litigation, Fried Frank Harris Shriver & Jacobson LLP, Bankruptcy, United States bankruptcy court
Second Circuit holds that equitable mootness doctrine applies to appeals from orders confirming liquidating chapter 11 plans

On October 29, 2014, the United States Court of Appeals for the Second Circuit affirmed the decision of the District Court for the Southern District of New York dismissing as equitably moot appeals filed by three individuals (the “Appellants”) in the chapter 11 case of In re BGI Inc. f/k/a Borders Group, Inc.

USA, Insolvency & Restructuring, Litigation, Fried Frank Harris Shriver & Jacobson LLP, Liquidation, Second Circuit, United States bankruptcy court
District of Delaware attributes value to Debtor’s credit facility in denying a fraudulent transfer claim based on unreasonably small capital despite existing basis for lenders to terminate and subsequent termination of the facility

On September 30, 2014, in In re SemCrude, L.P.,1 the United States District Court for the District of Delaware, affirming the Bankruptcy Court’s decision, held that direct partnership distributions by debtor SemGroup, L.P. (the “Debtor”) and indirect partnership distributions by its general partner, SemGroup G.P., L.L.C., to certain limited and general partners could not be avoided as constructive fraudulent transfers.

USA, Delaware, Insolvency & Restructuring, Litigation, Fried Frank Harris Shriver & Jacobson LLP, Line of credit
Quadrant v. Vertin: duty to maximize value of an insolvent enterprise—business judgment rule applies to interested directors’ “risky” strategy to increase value, even though creditors bear the downside and the controller stands to benefit

In Quadrant Structured Products Company, Ltd. v. Vertin (October 1, 2014), Vice Chancellor Laster clarified the Delaware Chancery Court’s approach to breach of fiduciary duty derivative actions brought by creditors against the directors of an insolvent corporation.

USA, Delaware, Insolvency & Restructuring, Litigation, Fried Frank Harris Shriver & Jacobson LLP, Business judgement rule, Delaware Court of Chancery