A bankruptcy trustee or a debtor in possession has powers under the Bankruptcy Code to avoid certain transfers the debtor may have made prior to the petition date, including preferential and fraudulent transfers.

On March 22, 2017, the Supreme Court of the United States decided Czyzewski v. Jevic Holding Corp., 580 U.S. __ (2017), holding that a bankruptcy court may not use a structured dismissal of a chapter 11 case to approve a distribution scheme that violates the absolute priority rule. In many middle-market cases, chapter 11 debtors had used this tool to get deals done and reorganize, despite their inability to confirm a chapter 11 plan.

On January 17, 2016, the United States Court of Appeals for the Second Circuit resolved a major issue that had affected the efficacy of out-of-court restructurings involving notes issued under the Trust Indenture Act when it reversed the decision of the U.S.

Updates

In a pair of recent decisions,1two federal courts in the Southern District of New York have broadly interpreted Section 316(b) of the Trust Indenture Act (“TIA”)2to limit the ability of parties to strip guarantees from dissenti

Finds Bankruptcy Court to be Proper Forum for Claim Objection Despite Forum Selection Clauses in Investor Agreements

The Southern District of New York recently reiterated the critical difference between creditor claims and equity interests in the bankruptcy context.  In a recent opinion arising out of the Arcapita Bank bankruptcy case, the Court was faced with an objection to a proof of claim filed by an investor, Captain Hani Alsohaibi, who characterized his right to recovery against the debtors as being based on a “corporate investment.”

On June 4, 2014, the New York Court of Appeals will hear arguments arising from the bankruptcies of two law firms—Thelen and Coudert Brothers—as to whether the former partners of the bankrupt law firms must turn over profits earned on billable-hour client matters they brought to their new firms.

Following recall notices for its ignition switches in February 2014, General Motors, LLC (“New GM”) has been hit with at least 50 class actions and two individual suits in not less than 20 federal and two state courts asserting claims against New GM for defective vehicles and parts sold by Motors Liquidation Company, formerly known as General Motors Corporation (“Old GM”).

On April 17, 2014, the United States Bankruptcy Judge Sean H. Lane issued an opinion in the Waterford Wedgwood bankruptcy discussing at length one of the defenses available to preference defendants.  The opinion turns upon the scope of “ordinary business terms,” the objective prong of the ordinary course of business defense.

A recent opinion out of the United States Bankruptcy Court for the Eastern District of Virginia (Richmond Division) serves as a reminder to secured creditors to steer clear of conduct that a bankruptcy court may deem inequitable and provide the court with cause to limit the secured creditor’s credit bid rights.  In In re The Free Lance-Star Publishing Co.