What creditor would ever want to be an involuntary bankruptcy petitioner under these statements of facts and law:

Oral arguments at the U.S. Supreme Court in Harrington v. Purdue Pharma L.P. happened on December 4, 2023. Here is a link to the official transcript of such arguments.

My Impression

I’ve read that transcript—and still don’t know what the Court is going to do.

But based on the comments/questions of the justices (which are summarized and compiled below), I do have one impression:

On Thursday 9 November, Macfarlanes hosted a webinar which focused on the role of directors and in particular navigating those stresses and strains placed upon them in the uncertainties of the current markets.

The webinar was given by an expert panel comprising of finance partner and head of Macfarlanes’ restructuring and insolvency group, Jat Bains, finance partner and qualified insolvency practitioner, Paul Keddie, and litigation partner, Lois Horne.

The panel discussed the following three principal themes.

Desperate people do desperate things. And desperation leads even good people astray.

So it is in the world of financial stress. Desperate people do desperate things: like providing sloppy financial statements to creditors, failing to assure that all collateral proceeds go to the proper place, and fudging on the truth here-and-there.

On 13 October 2023, the Insolvency Service (IS), acting on behalf of the Secretary of State for Business and Trade, discontinued the disqualification proceedings which it had initiated against five former non-executive directors (NEDs) of Carillion plc, the construction and outsourcing giant that collapsed into liquidation in 2018.

We hear a lot these days about bankruptcy venue abuse via corporate-entity manipulation shortly before bankruptcy filing.

Here’s the latest opinion on that subject—which allows Debtor’s choice of venue to stand, based on a newly-created entity:

Is an involuntary bankruptcy, filed by an owner/creditor of the Debtor, filed in good faith or in bad faith?

That’s the question before the U.S. Supreme Court on which it denied certiorari on October 30, 2023 (Wortley v. Juranitch, Case No. 23-211).

Here’s the gist of the case.

The U.S. Trustee is on a crusade to eradicate every type of third-party release from all Chapter 11 bankruptcy plans—no matter what the facts or circumstances might be.

It’s a policy based on the idea that, if the Bankruptcy Code doesn’t specifically and explicitly authorize something, then that something cannot be done . . . ever . . . under any circumstances . . . no matter what . . . period . . . end of story.

We now have another manifestation of that bright-line and unyielding position. Fortunately, the Bankruptcy Court rejects the U.S. Trustee’s objection.

A bankruptcy court has jurisdiction to dismiss a legal malpractice claim of non-debtor plaintiffs against non-debtor attorneys.

That’s the ruling in Murray v. Willkie Farr & Gallagher LLP (In re Murray Energy Holdings Co.), Adv. Pro. No. 22-2007, Southern Ohio Bankruptcy Court (decided October 5, 2023, Doc. 89)—appeal is pending.

Summary of Issue and Ruling

Bankruptcy Court denies a party’s request to enforce arbitration of a legal malpractice claim—and then dismisses that malpractice claim for failure to state a claim.

The opinion is Murray v. Willkie Farr & Gallagher LLP (In re Murray Energy Holdings Co.), Adv. Pro. No. 22-2007, Southern Ohio Bankruptcy Court (decided October 5, 2023, Doc. 89)—appeal is pending.

Context