A Texas judge rejected a request by one of Brazos Electric Power Cooperative’s (Brazos) creditors to arbitrate a contract dispute with Brazos over a shared coal plant, citing concerns that the arbitration could delay the bankruptcy case. Brazos is currently in a bankruptcy proceeding stemming from the historic 2021 Texas winter storm.

An insolvency moratorium first introduced during the COVID-19 pandemic applies to nearly all Russian legal entities, individuals, and sole entrepreneurs, and bans the commencement of insolvency proceedings against Russian obligors.

It begins with an awkward mouthful. Outside a bankruptcy brief, is “unimpairment” even a word? (No, per Merriam-Webster.) Inside Chapter 11, it’s much more: a trend.

Want to refinance your bonds cheaply? Are you an otherwise sound and solvent business, forced into bankruptcy by a massive fire (PG&E), persistent low commodity pricing (Ultra Petroleum), or a pandemic (Hertz, whose airport rental business was shuttered in 2020 by COVID-19)?

Or would you just prefer to boost your stock value by lowering your coupon?

This is how Tribune ends: not with a bang, but a whimper. The 12-year litigation saga, rooted in the spectacular failure of the media and sports conglomerate’s 2007 leveraged buyout, reached an end in late February with a curt “cert. denied” from the US Supreme Court.

Morgan Lewis was one of the firms that captained the defense for Tribune’s former shareholders. This post notes some lessons that we learned—and relearned.

Lesson One: Section 546(e)’s ‘New’ Safe Harbor

The US Supreme Court tends to hear a couple of bankruptcy cases per term. Most of these cases deal with interpreting provisions of the Bankruptcy Code. However, every few years or so, the Supreme Court decides a constitutional issue in bankruptcy. Some are agita-inducing (Northern Pipeline, Stern), some less so (Katz). The upcoming case is a little more nuanced, but could have major consequences.

Insight

Consider a lender that extends a term loan in the amount of $1 million to an entity debtor. The loan is guaranteed by the debtor’s owner. If both the debtor and the guarantor become subject to bankruptcy cases, it is settled that the lender has a claim of $1 million (ignoring interest and expenses) in each bankruptcy case. However, the lender cannot recover more than $1 million in total in the two cases combined. (Ivanhoe Building & Loan Ass'n of Newark, NJ v. Orr, 295 U.S. 243 (1935).)

In a case of first impression, the Eleventh Circuit held that Roth IRAs are excluded from Georgia debtors’ bankruptcy estates under the Bankruptcy Code and Georgia’s garnishment statute. In Hoffman v. Signature Bank of Georgia (In re Hoffman), 2022 U.S. App. LEXIS 2119 (11th Cir. Jan. 24, 2022), the court reversed the district court’s affirmance of the bankruptcy court’s order concluding that the debtor’s Roth IRAs were not excluded from his bankruptcy estate.

Not so long ago US Bankruptcy Judge Robert Drain of the Southern District of New York had his time in the barrel—pilloried in the media for approving releases to members of the Sackler family as part of a bankruptcy plan that would settle global opioid-related claims against Purdue Pharma, a bankruptcy debtor, and affiliated family members and other persons who were not bankruptcy debtors.

In Jackson v. Le Centre on Fourth, LLC (In re Le Centre on Fourth, LLC), 2021 U.S. App. LEXIS 33845 (11th Cir. Nov. 15, 2021), the Eleventh Circuit rejected creditors’ due process challenge to the release afforded to the debtor’s affiliates in a confirmed Chapter 11 plan.

Florida law provides that a UCC-1 financing statement is “seriously misleading” if it does not include the debtor’s correct name, unless “a search of the records of the filing office under the debtor’s correct name, using the filing office’s standard search logic, if any, would disclose” the financing statement notwithstanding the misnomer. But how much of a search is required?