Recent Events

The federal district court in New Jersey recently denied an appeal by maritime creditors of Hanjin to lift bankruptcy protections and allow arrest of Hanjin's vessels in and near U.S. ports. The federal district court judge agreed with the bankruptcy judge's grant of blanket protection to Hanjin and directed creditors of Hanjin to file claims in the Korean bankruptcy proceeding. Those claims are now due by October 25, 2016 in the Korean proceedings, according to an amended order issued by the Korean judge.

A number of towage and bunker suppliers in the Hanjin Shipping Co. Ltd. chapter 15 case have requested the intervention of a district court judge to clarify whether the U.S. Bankruptcy Court has authority to "effectively extinguish[] . . . maritime liens" on chartered vessels. The bankruptcy judge has acted to try to preserve Hanjin's assets and ability to continue its business, as he should do. The case concerns roughly $14 billion worth of cargo afloat or held up in container yards across the world. At least 10 vessels are known to be steaming toward U.S.

This past weekend, Hanjin vessels commenced unloading operations on the U.S. West Coast for the first time since Hanjin filed its bankruptcy petition with the Seoul Central District Court in Korea. Vessels have also been reportedly unloading in Japanese and Canadian ports. There is an obvious overriding public interest in having the many millions of dollars worth of cargo resume moving to its various destinations.

Yesterday afternoon in Newark, New Jersey, Judge John K. Sherwood of the U.S. Bankruptcy Court granted Hanjin Shipping Co. Ltd.'s request to recognize its Korean bankruptcy case and to provide U.S. bankruptcy protection to its assets and operations within the United States. However, the U.S. Bankruptcy Court's protection is subject to another hearing on Friday to sort out what arrangements can be made among the various stakeholders.

The Wall Street Journal has recently observed that if Hanjin Shipping Co. Ltd. fails in its attempts to reorganize and emerge from bankruptcy proceedings in Korea, it would represent the largest container shipping company to date to collapse. In the meantime, its creditors have apparently been active in Chinese, Singaporean, and American ports.

I sense a sea change in the recent Delaware decision in Intervention Energy Holdings, LLC, 2016 WL 3185576 (6/3/16), refusing to enforce a bankruptcy proofing provision of a Delaware LLC’s operating agreement. Until recently, the trend had been to accept the fundamental principles of bankruptcy remoteness, although courts sometimes found ways to avoid honoring anti-bankruptcy devices in specific cases.

Greenberg Traurig, LLP | gtlaw.com 1 Sixth Annual American College of Bankruptcy Seventh Circuit Education Committee Seminar Session: Exploring the Outer Limits of the Avoiding Powers September 11, 2015 IIT Chicago-Kent College of Law 565 West Adams Street Chicago, IL Moderator: Nancy A.

This week’s unanimous Supreme Court decision barring the strip off of wholly unsecured junior liens in chapter 7 cases is one of the stranger recent opinions of the Court.  See Bank of America, N.A. v. Caulkett, No. 13-1421, ___ U.S. ___ (June 1, 2015).  While the result is not particularly surprising, what is unusual is that the Court goes out of its way to question its two decades old decision inDewsnup and may even be hinting that it is ready to overrule that decision.  See Dewsnup v. Timm,502 U.S. 410 (1992).

A collective sigh of relief was the main effect of this week’s much-awaited Supreme Court decision on bankruptcy jurisdiction in Wellness International Network, Ltd. v. Sharif, No. 13-935, ___ U.S.___ (May 26, 2015, Sotomayor, J.). While a number of minor issues remain, the majority’s ruling that bankruptcy judges can issue judgments and final orders with the parties’ consent means that the current bankruptcy system can continue to function normally.

In a little-noticed November opinion, the Seventh Circuit greatly expanded the ability of a bankruptcy trustee to avoid a security interest for documentation errors under section 544(a)(1) of the Bankruptcy Code.  See State Bank of Toulon v. Covey (In re Duckworth), 776 F.3d 453 (7th Cir. 2014).