When a debtor files for bankruptcy, it’s axiomatic that all creditors, wherever located, must immediately cease their efforts to collect on debts owed to them by that debtor, right? Not necessarily so, says the United States Court of Appeals for the Seventh Circuit, insofar as those creditors and their collateral are located outside of the United States.

The Bankruptcy Protector

Recent rulings out of the United States Court of Appeals for the Fifth Circuit and its lower bankruptcy courts have emphasized the circuit’s broad interpretation of section 363(m) of the Bankruptcy Code, which protects bankruptcy sales from being overturned on appeal.

In her September 23 opinion in In re Royal Street Bistro, LLC, et al., No. 21-2285, District Judge Sarah S. Vance provided a comprehensive summary of the Fifth Circuit case law while mooting a debtor’s attempt to appeal a sale under section 363 of the Bankruptcy Code.

In his final opinion, Judge Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York held that dividends paid from proceeds of safe-harbored transactions under section 546(e) of the Bankruptcy Code are not safe-harbored. While only approximately 15 pages of Judge Drain’s 109-page final opus are dedicated to consideration of the section 546(e) issue, the relevant analysis ends with a pressing question to Congress and an appeal to modify section 546(e) to “restrict to public transactions its currently overly broad free pass . . .

The United States Court of Appeals for the Fifth Circuit entered its (second) opinion in the case of In re Ultra Petroleum Corporation, Case No. 21-20008, on October 14, 2022, potentially widening a circuit split on the issue of “make-whole” payments. With the circuit split potentially growing, this issue could be ripe for a grant of certiorari.

The Bankruptcy Protector

To the long list of things people love about lawyers we can add last week’s holding by the Eleventh Circuit Court of Appeals that “Blvd.” is utterly unrecognizable as “Boulevard” – at least by Article 9 of the Uniform Commercial Code as enacted in Florida.

The Bankruptcy Protector

On August 18, 2022, the United States Bankruptcy Court for the Southern District of Indiana, in In re BWGS, LLC, No. 19-01487-JMC-7A, 2022 WL 3568045 (Bankr. S.D. Ind. Aug. 18, 2022), narrowly interpreted the safe harbor provision in section 546(e) of the Bankruptcy Code by refusing to dismiss a lawsuit against a guarantor whose liability was eliminated by the debtor’s payment to the bank that held the guarantee.

Overview on Section 546(e) of the Bankruptcy Code

The Bankruptcy Protector

Bankruptcy Basics for New and Non-Bankruptcy Attorneys

This entry is part of Nelson Mullins’s ongoing “Bankruptcy Basics” blog series that is intended to address foundational aspects of bankruptcy for non-bankruptcy practitioners and professionals. This entry will discuss sales of assets “free and clear” under section 363 of the Bankruptcy Code.

The Bankruptcy Protector