The Second Circuit affirmed the judgment of lower courts upholding the application of certain swap agreement safe harbors in section 560 of the U.S. Bankruptcy Code (the Bankruptcy Code).

The increasing number of high-profile bankruptcies across a number of commercial hubs has brought renewed focus on important questions of jurisdiction arising out of the tension between local insolvency regimes on the one hand, and parties’ arbitration agreements on the other.

Since the end of the first quarter of 2020, bankruptcy professionals have been planning for a substantial increase in business bankruptcies. The newest statistics tell us that the wait is over. These bankruptcy filings follow the sustained economic contraction rooted in the COVID pandemic. But it would be too simplistic to say that COVID is the sole cause of this trend. Most of the businesses that have filed faced other challenges, such as heavy debt burdens, deteriorating markets or strategic missteps.

The COVID-19 pandemic has heavily disrupted our lives, communities, and businesses. Even with new approaches, not all businesses can overcome the substantial challenges brought by the pandemic. Lending programs like the Paycheck Protection Program have brought temporary relief, but many small businesses remain exposed to financial difficulties and face a real risk of bankruptcy.

New Small Business Provisions in Bankruptcy Code

The number of so-called mega-bankruptcies filed during the first half of the year tells only part of the story. The pain is not just at the top, but spreads across multiple sectors of the economy. Overall, business bankruptcy filings are 30% higher than they have been at any time during the last 5 years. And, with attempts to re-start the economy already sputtering, the news during the second half could be worse.

Recent insolvencies remind us that, when a seller of goods is unpaid, the question of possession leaps to the foreground. There is little value in a claim against an insolvent buyer for damages or for the price.

On June 22, 2020, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued an order concluding that the Commission and the United States Bankruptcy Courts have concurrent jurisdiction to review and address the disposition of natural gas transportation agreements (“FERC-jurisdictional agreement”) sought to be rejected through bankruptcy.

More than a third of the world’s population is under lockdown to slow the spread of COVID-19. The virus and these responsive measures have heavily disrupted lives, communities, and healthcare systems. Many businesses have been forced to change their operations. COVID-19 is rapidly pushing companies to operate in new ways, and the resilience of systems is being tested as never before.

My latest contribution to BloombergLaw was the following piece on some of the unique issues and challenges presented for self-insured employers and their plan administrators when those employers seek (or contemplate) bankruptcy relief. In brief: