In bankruptcy proceedings, is a class action superior to the claims administration process as a vehicle for resolving claims under the federal and New York State Workers Adjustment and Retraining Notification Act (the “WARN Act”)? In Schuman v. The Connaught Grp., Ltd. (In re The Connaught Grp., Ltd.), Case No. 12-01051, Slip Op. (Apr.
As the American economy continues to slog through the ongoing Great Recession, even financially sound companies face challenges due to the continued economic malaise. In particular, a company that works with suppliers, customers and other business partners facing financial troubles needs to be prepared to handle the consequences of others' fiscal problems. Being attuned to signs of distress and taking defensive actions early can help strong companies avoid problems and be better positioned in the case of a significant event, such as a business partner filing for bankruptcy.
Can an equity investor who directs an insider to contribute "new value" to a debtor under a plan of reorganization, so as to retain his interest in the company, avoid an express market test for that new equity? The answer to that question is a resounding "no," according to Chief Judge Easterbrook of the Seventh Circuit Court of Appeals in In re Castleton Plaza, LP, Case No. 12 Civ. 2639, 2013 WL 537269 (7th Cir. Feb. 14, 2013).
In preparing a statement supporting the determination that recusal from a bankruptcy proceeding was unnecessary, U.S. Bankruptcy Court Judge Richard E. Fehling quoted Master Sergeant Georg Hans Shultz from the television sitcom Hogan’s Heroes: “I KNOW NOTHING! NOTHING!”
Criminal defendants facing onerous restitution obligations as part of their sentence might contemplate a bankruptcy filing, in the hope of staving off the restitution obligation. In a case of first impression, the Second Circuit recently considered whether the Bankruptcy Code’s automatic stay provision halts a defendant’s obligation to pay restitution and firmly closed the door on that potential gambit.
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Presumed Reasonable Absent Certain Circumstances
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I just had an interesting discussion with a partner on the subject of the sale of exempt property in bankruptcy. We concluded that even though tenant by the entireties real estate might be exempt from creditor claims in some states, nonetheless in bankruptcy it is still property of the estate under Bankruptcy Code section 541 and subject to the bankruptcy trustee’s general powers of sale under Code section 363(b). The analysis goes like this: section 541 creates a bankruptcy estate that includes all interests of the debtor in property without mention of exemptions, and sec