In a May 2, 2017 decision, the Sixth Circuit Court of Appeals decided the fate of a stream of rental payments from the bankrupt owner of a residential complex. (In re: Town Center Flats, LLC, No. 16-1812, May 2, 2017, Sixth Circuit Court of Appeals) The case resembled a similar one, far more controversial and with a different result, from 1993. (Octagon Gas Systems, Inc. v. Rimmer, 995 F.2nd 948, 10th Circuit Court of Appeals, 1993) The Octagon Gas case roiled the factoring and receivables purchasing industry.
On March 10, 2017, the U.S. District Court for the Southern District of New York issued a Memorandum Order, in which it affirmed a controversial bankruptcy court ruling. The district court agreed with the bankruptcy court that Sabine Oil & Gas Corp., an upstream oil and gas producer, could reject a number of its gathering contracts with midstream energy companies.
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.
In a March 8, 2016 ruling from the bench, the U.S. Bankruptcy Court for the Southern District of New York issued a significant decision regarding the ability of a debtor in bankruptcy to reject gas gathering agreements and similar intrastate contracts. Judge Shelley Chapman, overseeing the bankruptcy case of In re Sabine Oil & Gas Corp., determined that those agreements could be rejected in bankruptcy, notwithstanding contractual provisions that purport to issue conveyances that run with the land.
On September 8, 2015, a federal district court invalidated a portion of the Georgia post-judgment garnishment statute in Strickland v. Alexander, No. 1:12-CV-02735-MHS (N.D. Ga.). Senior Judge Marvin Shoob found that the statute was constitutionally deficient on due process grounds, insofar as it fails to require: