To encourage vendors and other creditors to continue doing business with financially distressed entities, the Bankruptcy Code includes various defenses to litigation brought by a bankruptcy trustee or chapter 11 debtor-in-possession ("DIP") seeking to avoid pre-bankruptcy payments to such entities. One of these defenses shields from avoidance transfers made to pay debts incurred in the ordinary course of business of the debtor and the transferee.

Mitigating risk of loss associated with a bankruptcy filing should be an element of any commercial transaction, especially if it involves a sale or license of intellectual property rights. A ruling recently handed down by the U.S. Court of Appeals for the Third Circuit provides a stark reminder of the consequences of when it is not. In In re Mallinckrodt PLC, 99 F.4th 617 (3d Cir.

Section 546(e) of the Bankruptcy Code's "safe harbor" preventing avoidance in bankruptcy of certain securities, commodity, or forward-contract payments has long been a magnet for controversy. Several noteworthy court rulings have been issued in bankruptcy cases addressing the scope of the provision, including its limitation to transactions involving "financial institutions" as transferors or transferees, its preemption of avoidance litigation that could have been commenced by or on behalf of creditors under applicable non-bankruptcy law, and its application to non-public transactions.

A bedrock principle underlying chapter 11 of the Bankruptcy Code is that creditors, shareholders, and other stakeholders should be provided with adequate information to make an informed decision to either accept or reject a chapter 11 plan. For this reason, the Bankruptcy Code provides that any "solicitation" of votes for or against a plan must be preceded or accompanied by stakeholders' receipt of a "disclosure statement" approved by the bankruptcy court explaining the background of the case as well as the key provisions of the chapter 11 plan.

The U.S. Supreme Court handed down three bankruptcy rulings to finish the Term ended in July 2024. The decisions address the validity of nonconsensual third-party releases in chapter 11 plans, the standing of insurance companies to object to "insurance neutral" chapter 11 plans, and the remedy for overpayment of administrative fees in chapter 11 cases to the Office of the U.S. Trustee. We discuss each of them below.

U.S. Supreme Court Bars Nonconsensual Third-Party Releases in Chapter 11 Plans

Courts disagree over whether a foreign bankruptcy case can be recognized under chapter 15 of the Bankruptcy Code if the foreign debtor does not reside or have assets or a place of business in the United States. In 2013, the U.S. Court of Appeals for the Second Circuit staked out its position on this issue in Drawbridge Special Opportunities Fund LP v. Barnet (In re Barnet), 737 F.3d 238 (2d Cir. 2013), ruling that the provision of the Bankruptcy Code requiring U.S. residency, assets, or a place of business applies in chapter 15 cases as well as cases filed under other chapters.

En octobre 2020, la Commission européenne a approuvé une mesure de recapitalisation d'environ 833 millions EUR, notifiée par la Suède et le Danemark, en faveur de SAS. Cette mesure était fondée sur l’Encadrement temporaire relatif aux aides d'État dans le contexte de la crise du COVID-19.

In October 2020, the European Commission approved a recapitalisation measure of approximately €833 million, notified by Sweden and Denmark, in favour of SAS. This measure was adopted under the State aid COVID-19 Temporary framework.

Ryanair challenged the Commission decision and secured its annulment by the General Court of the EU in May 2023 (Case T-238/21). In late 2022, SAS entered a collective insolvency proceeding. Following the annulment of the 2020 decision, the Commission approved again in November 2023 the recapitalisation measure.  

On 8 May 2024, the General Court of the EU annulled the Commission decision of 26 July 2021 approving restructuring aid to German airline Condor following an annulment action lodged by Ryanair. The Commission should have opened a formal procedure because of doubts about the compatibility of the aid. The General Court rejected Ryanair’s argument relating to the impact of the aid on its competitive position.

Background

FRP Advisory Trading Limited won the United Kingdom's largest-ever wrongful trading claim and successfully established the first "misfeasance trading" claim against former directors of British Home Stores ("BHS"), highlighting the critical responsibilities of directors managing financially troubled company assets.