Highlights
Long-anticipated U.S. Supreme Court decision in Purdue Pharma shakes up the scope of bankruptcy releases
Insurers get increased ability to participate in bankruptcy cases
Overpayment of bankruptcy fees is not refundable to Chapter 11 debtors
With the increase in global trade and business, often involving complex corporate structures in multiple jurisdictions, we expect to see a significant increase in cross-border insolvency and restructuring matters in coming years. This is especially the case with rapid advancements in technology and digital change driving “borderless” transactions and investments in every industry.
Highlights
The Supreme Court held Section 363(m) is only a “statutory limitation” to accessing appellate relief in disputed bankruptcy sales that requires parties to take certain procedural steps to be effective
The Supreme Court also addressed mootness arguments and held that as long as parties have a concrete interest, however small, in the outcome of an appeal, the appeal should remain alive
The ruling provides insight as to how the Supreme Court may tackle the controversial doctrine of “equitable mootness”
Highlights
Counterparties should continue to follow their current contractual obligations
Silicon Valley Bank’s parent company bankruptcy filing will not impact contractual rights
Counterparties should be vigilant and consider alternate financing arrangements
Highlights
On Jan. 10, the U.S. Supreme Court agreed to hear three cases, which present the following three questions:
Does a motion for relief from a final judgment that is premised on a legal error fall under Rule 60(b)(1) or 60(b)(6)?
Does the Constitution's provision for “uniform” bankruptcy laws permit Congress to implement Chapter 11 fee increases in different ways in different regions of the country?
Highlights
In an effort to resolve divergent court rulings, the new Consolidated Appropriations Act gives the Small Business Administration discretion to determine which small and individual debtors may obtain PPP loans in bankruptcy
The CAA allows debtors in all bankruptcy cases to automatically take up to 210 days (thereby extending the statutory period by 90 days) to choose to continue with a non-residential real property lease and provides an additional grace period on payments for small business debtors after a filing
The impact of COVID-19 is being felt at all levels of the economy and will work its way through bankruptcy courts for years to come. In these early days, many creditors who are themselves suffering are providing assistance to troubled companies. Suppliers and commercial landlords are agreeing to various forms of relief, including modified credit terms and rent relief to allow customers to bridge this period of unprecedented disruption. While these corporate good Samaritans are providing immediate aid they may be subjecting themselves to the risk of future losses.
The economic fallout from the COVID-19 pandemic will leave in its wake a significant increase in commercial chapter 11 filings. Many of these cases will feature extensive litigation involving breach of contract claims, business interruption insurance disputes, and common law causes of action based on novel interpretations of long-standing legal doctrines such as force majeure.
Last week, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law, implementing broad relief for individuals and businesses affected by COVID-19. One of the sections of the CARES Act receiving less attention is a temporary amendment to the Bankruptcy Code to provide streamlined reorganization procedures for businesses with debt of less than $7.5 million.