Overview of Insolvency Rules and Restructuring Procedures Pursuant to Italian Bankruptcy Law

Last month, District Court Judge Shira A. Scheindlin of the Southern District of New York affirmed a bankruptcy court ruling which held that the environmental cleanup obligations of debtor Mark IV Industries, Inc. were not discharged in bankruptcy.2 Given the current legal landscape, Mark IV may make the likelihood of discharging environmental claims even more difficult, potentially undermining chapter 11 as an optimal alternative for companies saddled with environmental liabilities.

On August 9, 2011, the United States Court of Appeals for the Fifth Circuit held that a non-insider's debt claim can be recharacterized as equity in Grossman v. Lothian Oil Inc. (In re Lothian Oil, Inc.).2 The Fifth Circuit, in reversing the district court, held that: (i) there is no per se rule limiting to insiders the recharacterization of debt claims as equity and (ii) non-insider debt claims may be recharacterized as equity under section 502(b) of the Bankruptcy Code.

In re Caribbean Medical Testing Center, Inc. (Bankr. D. Puerto Rico) Case no. 11-06124

In re Hotel Airport Inc. (Bankr. D. Puerto Rico) Case no. 11-06620

In re GALP Highcross Limited Partnership (Bankr. S.D. Tex.) Case no. 11-36741
In re GALP Waters Limited Partnership (Bankr. S.D. Tex.) Case no. 11-36743

In re Culver Village, LLC (Bankr. C.D. Cal.) Case no. 11-46359

In re Provo Gateway, LLC (Bankr. D. Utah) Case no. 11-31259

In re Gelt Financial Corporation (Bankr. E.D. Pa.) Case no. 11-15827

In re East Coast Abatement Co. Inc. (Bankr. E.D. Va.) Case no. 11-73560