The U.S. Trustee is on a crusade to eradicate every type of third-party release from all Chapter 11 bankruptcy plans—no matter what the facts or circumstances might be.

It’s a policy based on the idea that, if the Bankruptcy Code doesn’t specifically and explicitly authorize something, then that something cannot be done . . . ever . . . under any circumstances . . . no matter what . . . period . . . end of story.

We now have another manifestation of that bright-line and unyielding position. Fortunately, the Bankruptcy Court rejects the U.S. Trustee’s objection.

The United States Supreme Court recently accepted review of In re Kaiser Gypsum Co., Inc., 60 F.4th 73 (4th Cir.

A bankruptcy court has jurisdiction to dismiss a legal malpractice claim of non-debtor plaintiffs against non-debtor attorneys.

That’s the ruling in Murray v. Willkie Farr & Gallagher LLP (In re Murray Energy Holdings Co.), Adv. Pro. No. 22-2007, Southern Ohio Bankruptcy Court (decided October 5, 2023, Doc. 89)—appeal is pending.

Summary of Issue and Ruling

Bankruptcy Court denies a party’s request to enforce arbitration of a legal malpractice claim—and then dismisses that malpractice claim for failure to state a claim.

The opinion is Murray v. Willkie Farr & Gallagher LLP (In re Murray Energy Holdings Co.), Adv. Pro. No. 22-2007, Southern Ohio Bankruptcy Court (decided October 5, 2023, Doc. 89)—appeal is pending.

Context

This ideal is floating around:

• upon removal of a Subchapter V debtor from possession, for fraud or other cause,
• the Subchapter V trustee has no expanded right, power, function or duty beyond operating debtor’s business (the “Ideal”).

This Ideal is both:

• contrary to unambiguous language of the Bankruptcy Code, as a matter of law; and
• in Never-Never Land, as a matter of practice.

I’ll try to explain.

This is a truism:

A study on using round-number offers and precise-number offers in negotiations reaches these two conclusions:

Here’s the latest opinion on a controversial question: In re Franco’s Paving LLC, Case No. 23-20069, Southern Texas Bankruptcy Court, (decided 10/5/2023; Doc. 74).

The Question & Answer

Voter apathy is a problem in Subchapter V cases. That apathy is in the form of creditors failing or refusing to vote on a Subchapter V plan. The In re Franco’s opinion addresses this apathy problem head-on.

Recent expressions of concern about courts mandating mediation reminded me of a mandated mediation process that worked well: the City of Detroit bankruptcy.

An illustration of the success of mandated mediation in the Detroit case is this line:

The Bankruptcy Judge“put an end to the public bickering over the water deal by ordering the parties into confidential mediation.”

In Purdue Pharma, the U.S. Supreme Court grants certiorari on this question:

THE BRIEF

FINANCIAL SERVICES LITIGATION QUARTERLY

FALL 2023

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TABLE OF CONTENTS

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District Court Upholds New ERISA Rules on ESG Investing

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Fourth Circuit Holds That Class-Action Waivers Must Be Addressed Before Class Certification

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Ninth Circuit: Fees for Claims-Made Settlements Must Be Based on Actual Recovery

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