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

Insurers with unwanted runoff blocks of business should consider the latest guidance from insurance regulators on potential transactional structures that could mitigate this issue.

In its recent opinion in Raymond James & Associates Inc. v. Jalbert (In re German Pellets Louisiana LLC), 23-30040, 2024 WL 339101 (5th Cir. Jan. 30, 2024), the Fifth Circuit held that a confirmed bankruptcy plan enjoined a party from asserting certain indemnification counterclaims against a plan trustee because the party did not file a proof of claim.

Background

Whether a solar system is a “fixture” sounds like a mundane legal issue – but it has significant implications for the residential solar industry and for the financing of residential solar systems. If a system is regarded as a “fixture” of the house to which it is attached, then the enforceability and priority of the finance company’s lien on the system will be subject to applicable real estate law.

Companies in Chapter 11 must publicly report substantial financial information — indeed, more information should be reported or available publicly in Chapter 11 than outside of Chapter 11. This paper analyzes what information must be publicly reported or disclosed under the securities laws, the Bankruptcy Code and Bankruptcy Rules; what debtors do to minimize public reporting; and what creditors can do to get the public reporting they deserve.

Debtors May Stop Public Reports Under the Securities Laws.

If your company is named in a new lawsuit or receives a EEOC charge, part of your review process should include checking to see if the filing complainant or plaintiff has a pending bankruptcy action. If so, the next step is to see if the claimant disclosed their lawsuit or administrative complaint in his or her bankruptcy petition. If not, you may have a successful estoppel argument.

What Happened?

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”

The Bottom Line

One feature commonly seen in commercial lending transactions is a waiver of the borrower’s authority to file for bankruptcy without the consent of the lender. While such “blocking” provisions are generally upheld where the equity interest holders are the parties with such rights, they are generally unenforceable as a matter of public policy when such protection is given to a creditor with no meaningful ownership interest in the corporate debtor.

For at least the past decade, federal bankruptcy courts have routinely prohibited cannabis businesses from seeking protection under federal bankruptcy law, regardless of whether a cannabis business is legally operating under state law.