Directors and officers should take note of a recent decision from the US Bankruptcy Court for the Southern District of New York concerning access to D&O insurance policy proceeds. In In re SVB Financial Group, Case No. 23-10367 (Bankr. S.D.N.Y.
In a highly anticipated decision issued on May 30, 2023, the Second Circuit Court of Appeals rendered its opinion in Purdue Pharma LP v. City of Grand Prairie (In re Purdue Pharma LP)1 approving a Chapter 11 plan’s inclusion of a nonconsensual release of creditors’ direct claims against non-debtor third parties.
This client alert describes the history of the case, identifies some of the key takeaways from the decision and outlines where other jurisdictions in the country stand on nonconsensual third-party releases.
In an anticipated decision, on May 30, 2023, the Second Circuit Court of Appeals issued its decision approving a Chapter 11 plan’s inclusion of a nonconsensual release of direct claims against non-debtor third parties. Purdue Pharma LP v. City of Grand Prairie (In re Purdue Pharma LP), No. 22-110 (2d Cir. May 30, 2023).
Silicon Valley Bank (SVB) was closed by its California state regulators on Friday, March 10, 2023, and the Federal Deposit Insurance Corporation (FDIC) was appointed as receiver. As the market absorbed these developments, customers of SVB and other regional banks rushed to protect their deposits over the weekend, resulting in the closure of Signature Bank in New York, and the announcement on Sunday that all deposits at SVB and SB were moved to newly formed bridge banks.
What you need to know:
A U.S. bankruptcy judge in Delaware has held that the two-year "look-back" period in which a transfer occurring within two years of the bankruptcy petition filing date may be avoided, under Section 548 of the U.S. Bankruptcy Code, cannot be equitably tolled. After some inconsistent orders about whether the courts may broaden the look-back period, this decision should give greater certainty to lenders when evaluating their exposure upon the commencement of a bankruptcy case by a borrower.