“[L]ack of good faith in a SIPA [Securities Investor Protection Act] liquidation applies an inquiry notice, not willful blindness, standard, and that a SIPA trustee does not bear the burden of pleading the transferee’s lack of good faith,” held the U.S. Court of Appeals for the Second Circuit on Aug. 30, 2021. In re Bernard L. Madoff Investment Securities LLC, 2021 WL 3854761, 91 (2d Cir. Aug. 30, 2021) (“Madoff”).

The author examines a recent decision by the U.S. Court of Appeals for the Third Circuit that involved whether a contract was, or was not, an executory contract.

“[B]ankruptcy inevitably creates harsh results for some players,” explained the U.S. Court of Appeals for the Third Circuit on May 21, 2021, when it denied a film producer’s claim for contractual cure payments in In re Weinstein Company Holdings, LLC. 1

Courts frequently dismiss creditor appeals of bankruptcy confirmation orders as equitably moot. However, the Eighth Circuit Court of Appeals recently departed from this historic practice. In reversing a District Court determination that confirmation of a plan rendered a creditor’s appeal equitably moot, the Eighth Circuit held that motions to dismiss for equitable mootness should be “rarely granted,” and it reversed and remanded the lower courts’ dismissal of a creditor’s appeal of a Plan Confirmation Order on equitable mootness grounds.

"`Staggering' legal fees in Boy Scouts Bankruptcy Case." So read the title of an article in The New York Times on May 11, 2021. According to the reporter, a "lawyer negotiating a resolution to the multi-billion dollar bankruptcy filed by the Boy Scouts of America billed $267,435 in a single month. Another charged $1,725 for each hour of work. New lawyers fresh out of law school have been billing at an hourly rate of more than $600." The bankruptcy judge presiding over the case has called the fee totals "staggering," said the reporter.

The Third Circuit recently held, in a case from the Energy Future Holdings bankruptcy, that a losing stalking horse bidder can provide sufficient value to the debtor’s estate to receive an administrative claim for a break-up fee and expenses. In re Energy Future Holdings Corp., 990 F.3d 728, 748 (3rd Cir. 2021). This represents an expansive view of potential administrative claims related to those costs, providing bidders significant potential protections for their bids.

“[B]ankruptcy inevitably creates harsh results for some players,” explained the U.S. Court of Appeals for the Third Circuit on May 21, 2021, when it denied a film producer’s claim for contractual cure payments. In re Weinstein Company Holdings, LLC, 2021 WL 2023058, *9 (3d Cir. May 21, 2021).

Although not a new concept, use of the reverse vesting order (RVO) structure to effect distressed M&A transactions in proceedings under the Companies’ Creditors Arrangement Act (Canada) (CCAA) has quickly gained popularity in Canada over the last year. At its core, an RVO transaction involves a transfer of unwanted assets and liabilities — the “bad assets” — out of a distressed company into a newly established non-operating subsidiary, leaving the distressed business entity with only the “good assets” left to be acquired.

Le 1^er avril 2021, la Cour suprême du Canada a rejeté la demande d’autorisation d’appel de la décision de la Cour d’appel du Québec dans l’affaire Séquestre de Media5 Corporation, 2020 QCCA 943. Par conséquent, les tribunaux du Québec ont maintenant confirmation de la marche à suivre pour la nomination de séquestres nationaux à la demande des créanciers garantis.

Le 20 juillet 2020, la Cour d’appel du Québec annulait la décision rendue par la Cour supérieure et confirmait les principes suivants :

On April 1^st, 2021, the Supreme Court of Canada dismissed the application for leave to appeal the decision of the Court of Appeal of Québec in Séquestre de Media5 Corporation, 2020 QCCA 943. As a result, Quebec courts now have clarity regarding their ability to appoint national receivers for secured creditors.

On July 20, 2020, the Court of Appeal overturned the lower court’s decision and confirmed the following principles:

The debtors' legal malpractice claim was "not property of their bankruptcy estate," held a split Ninth Circuit on June 30, 2020. In re Glaser, 816 Fed. Appx. 103, 104 (9th Cir. June 30, 2020) (2-1). But the U.S. District Court for the District of Minnesota one week later affirmed a bankruptcy court judgment that "the [debtor's] estate was the proper owner" of such a claim. In re Bruess, 2020 WL3642324, 1 (D. Minn. July 6, 2020).