Each day creditors across the globe receive the bad news that a customer is not paying its debts or is otherwise insolvent. Israeli creditors, whether lenders or vendors, are no exception. Knowing what to do can limit exposure and maximize recovery of debts owed by the insolvent party.
A recent decision by the Court of Appeals for the Third Circuit affirming the decisions of both the bankruptcy and district courts, provides an interesting analysis of “willful” violations of the automatic stay under Section 362 of the Bankruptcy Code. See California Coast Univ. v. Aleckna (In re Aleckna), No. 20-1309 (3d Cir. 2021).
It is said that the word bankruptcy originated in the middle ages from the term “breaking the bench.” At that time, rupturing a craftsman’s bench was the punishment for defaulting. Later, debtors were punished for their failure to pay their debts through imprisonment. Neither approach helped the creditor. Rather, it punished those dependent upon the debtor for support. In the late 19th Century, the American system of bankruptcy was created to break from these policies and provide debtors a fresh start.
Should a claim for appraisal rights brought by a former shareholder of a Chapter 11 debtor be subordinated under Section 510(b) of the Bankruptcy Code? According to the Bankruptcy Court for the District of Delaware, the answer is yes. See In re: RTI Holding Co., LLC, No. 20-12456, 2021 WL 3409802 (Bankr. D. Del. Aug. 4, 2021).
Background
Trillions of dollars of securities are issued on the strength of bankruptcy remoteness and special purpose entities (“SPVs”) intended to be bankruptcy remote. These transactions generally involve hundreds of millions of dollars and investors’ expectations that the SPVs will not be dragged into a potential bankruptcy filing of their non-SPV affiliates.
Once again, a bankruptcy court has weighed in on the subject of discharging student loan debt in the context of a chapter 7 proceeding.
In a recent opinion, the Bankruptcy Court for the District of Maryland dealt with a conflict between the strong presumption in favor of enforcing arbitration agreements and the Bankruptcy Code’s emphasis on centralization of claims. Based on an analysis of the two statutory schemes and their underlying policies and concerns, the Court decided to lift the automatic stay to allow the prepetition arbitration proceeding to go forward with respect to non-core claims.
Background
The United States Bankruptcy Court for the District of New Mexico added its voice to the split in judicial authority on whether a lien or similar transfer can be avoided under sections 544, 547, 548 and 549 of the Bankruptcy Code where only the debtor itself may benefit from the avoidance. Judge Thuma in his recent decision in U.S. Glove, Inc. v. Jacobs (In re U.S. Glove, Inc.), AP No. 21-1009, 2021 WL 2405399 (Bankr. D. N.M.
The application of sovereign immunity principles in bankruptcy cases has vexed the courts for decades. The U.S. Supreme Court’s opinions on the matter have not helped much. Although they have addressed the issue in specific contexts, they have not established clear guidelines that the lower courts may apply more generally. The Third Circuit took a crack at clarifying this muddy but important area of the law in the case of Venoco LLC (with its affiliated debtors, the “Debtors”).
Background
Michael Traison Chicago/NYC – 312.860.4230
Michael Kwiatkowski Garden City – 516.296.9144