The defendant "was a `mere conduit' of [a] fraudulent transfer and cannot be liable to the bankruptcy estate for funds she never knew about," held the U.S. Court of Appeals for the Second Circuit on May 5, 2022. In re BICOM N.Y., LLC, 2022 WL 1419997 (2d Cir. May 5, 2022). Affirming the lower courts' granting of summary judgement to the defendant transferee, the court refused to "equate ...

Thanks are owed to SPB summer associate Gabby Martin for her contributions to this article.

Last month, a Florida federal jury found in favor of a credit reporting agency (“CRA”) in a trial centering on whether the CRA took “reasonable” steps to assure the accuracy of a consumer’s credit report after a consumer dispute. The result is a valuable glimpse into how juries view the burdens of the statutory obligations placed on reporting agencies by the Fair Credit Reporting Act (“FCRA”).

The Third Circuit recently affirmed the bankruptcy court's approved retention of the debtor's counsel ("S") when that "law firm dropped an existing client to avoid conflicts that would prevent it from taking on a more lucrative client [i.e., the debtor]." In re Boy Scouts of America, 2022 WL 1634643, *7 (3d Cir. May 24, 2022) (BSA). According to the court, there were "not enough facts to put [the so-called "hot potato" doctrine] into play" and disqualify S under the Rules of Professional Conduct. Id.

The perceived costs of proposing a restructuring plan are seen to be the biggest inhibitors to using the process for SMEs. It is still a relatively new tool and insolvency practitioners, lawyers and the courts are still grappling with it, but as we have seen recently in Amigo Loans it can provide creative and innovative restructuring solutions[1].

On June 6, 2022, the U.S. Supreme Court issued its opinion in Siegel v. Fitzgerald, in which the Court held that the Bankruptcy Judgeship Act of 2017, Pub. L. 115-72, Div. B, 131 Stat. 1229 (the “2017 Act”) was unconstitutional.

Last November, in In re LTL Mgmt. LLC, 1 Bankruptcy Judge Craig Whitley in Charlotte, North Carolina, ordered LTL Management LLC’s Chapter 11 bankruptcy case moved to New Jersey after finding that LTL Management had used the “Texas Two-Step” to manufacture jurisdiction in North Carolina improperly. LTL Management is a subsidiary of Johnson & Johnson (“J&J”) and a defendant in thousands of talc-related tort claim lawsuits.

In In re Purdue Pharma, L.P., 1 U.S. District Court Judge Colleen McMahon of the Southern District of New York vacated Purdue Pharma’s confirmed plan of reorganization after finding that the bankruptcy court below did not have statutory authority to issue a confirmation order granting non-consensual third-party releases—namely for the benefit of the Sackler family, which owns Purdue.

It is often the case, that insolvency claims are pursued against former directors of the insolvent company or persons connected to them. It is also often the case, that such claims are assigned to a litigation funding company given lack of funds in the insolvent estate to pursue them. This is what happened in Lock v Stanley where various claims against the former directors, their parents and connected company were assigned to Manolete.

What options does a creditor have when they are frustrated with how a debtor is conducting its chapter 11 bankruptcy case? In In re PWM Property Management LLC, the Delaware bankruptcy court denied a motion by creditors and interest holders to file a proposed plan of reorganization as an exhibit to their opposition to the debtors’ motion to extend the exclusivity period. The PWM Property Management decision serves as an important reminder of the strict limits on who can file and solicit a plan of reorganization and when filing of a plan is appropriate.

In the case of Caversham Finance Limited (in administration) [2022] EWHC 789, the court considered whether errors in a notice to creditors seeking consent to extend an administration made the extension invalid. This case is important as it shows the court’s approach to omission of prescribed information in notices to creditors.