Courts agree that bankruptcy trustees control bankrupt companies' attorney-client privilege. It is easy to underestimate this basic principle's strength.

In 2015, the energy sector accounted for more than one-half of all public company bankruptcy filings, including eight of the 10 largest filings. Current oil prices and bond values indicate that 2016 will be another active year. As of late January 2016, crude oil prices hovered around $30 per barrel. These low prices are reflected in the bond market, where in December 2015, approximately $80 billion in non-defaulted oil and gas debt was trading below 50 cents on the dollar.

On January 25, Lehman and JPMorgan announced a settlement to resolve several aspects of the contentious and multifaceted Lehman-JPMorgan dispute that has lingered throughout Lehman’s bankruptcy.  The bankruptcy court will hear a motion to approve the settlement on February 8.

The District Court for the Southern District of New York recently affirmed the Bankruptcy Court’s decision to approve the method used by trustee of the estate of Bernard L. Madoff Investment Securities LLC (BLMIS) to value the net equity of transfers between BLMIS accounts. See In re BLMIS (Melton Tr. v. Picard), Case No. 1:15-cv-01195-PAE (S.D.N.Y. Jan. 14, 2016).

Background

Many courts recognize that a corporation's constituent (such as an audit committee or a group of independent directors) can own the privilege and work product protection covering the constituent's internal corporate investigation. Under this approach, the company's bankruptcy trustee cannot access or waive that privilege or work product protection. See, e.g., Ex parte Smith, 942 So. 2d 356 (Ala. 2006) (denying a bankruptcy trustee's attempt to access pre-bankruptcy communications between the company's independent directors and its Skadden Arps lawyers).

Effective January 1, 2016, the Pension Benefit Guaranty Corporation (PBGC) altered the reportable event rules for defined benefit pension plans. Under new final regulations, the PBGC substantially reduced the reporting requirements for pension plan administrators, sponsors and contributing employers. In fact, the PBGC estimates that the final regulations will allow 82 percent of pension plans with more than 100 participants to utilize a reporting waiver. 

On Sept. 30, a district court resolved a significant portion of outstanding litigation in the bankruptcy proceeding of Lehman Brothers Holdings Inc. and its subsidiaries.See Lehman Bros. Holdings Inc. v. JPMorgan Chase Bank, N.A. (In re Lehman Bros. Holdings Inc.), No. 1:11-cv-06760 (S.D.N.Y. Sept., 30, 2015). This litigation flows from the debtors’ allegations that JPMorgan Chase Bank, N.A. (JPMC) coerced billions of dollars from Lehman on the eve of its bankruptcy filings in September 2008. Lehman Brothers Holdings Inc.

A recent bankruptcy decision in Florida may have implications for troubled healthcare entities that seek to avoid Medicare termination and preserve reimbursements. In the case In re: Bayou Shores SNF, LLC, Case No. 8:14-bk-09521-MGW, (Bankr. M.D. Fla. Dec. 31, 2014), the bankruptcy court found that a nursing home’s Medicare provider agreement had survived bankruptcy despite notice and intent to terminate the agreement issued by the Center for Medicare and Medicaid Services (CMS).

On October 31, 2014, the U.S. Court of Appeals for the 4th Circuit interpreted Maryland law in ruling that a bank’s security interest in a Chapter 11 debtor’s property created by a deed of trust that was executed before, but recorded after, the Internal Revenue Service filed a tax lien, had priority over the tax lien.

Background

Is electricity goods or services?  That seemingly simple yet confounding question is illustrated by three recent bankruptcy cases (all of which consider whether an electricity provider is entitled to an administrative expense priority under Bankruptcy Code Section 503(b)(9) for “the value of goods received by the debtor” in the ordinary course within 20 days prior to the automatic stay):