Today, the Second Circuit reissued the latest in a line of cases adopting an expansive reading of the safe harbor under Section 546(e) of the Bankruptcy Code. In re Tribune Co. Fraudulent Conveyance Litig., Case 13-3992, Doc. 356-1 (2d Cir. Mar. 29, 2016). (This opinion was originally issued on March 24 and withdrawn on March 28. The opinion released today contains minor, non-substantive alterations to the text on pages 8, 22, 26, and 40. In all other respects, it is identical to the opinion withdrawn last week).

In a case of first impression, the Seventh Circuit recently issued an opinion that may cause landlords and their advisors to re-evaluate the consequences of terminating a financially distressed commercial tenant’s lease prior to bankruptcy. Official Comm. of Unsecured Creditors of Great Lakes Quick Lube LP v. T.D. Investments I, LLP (In re Great Lakes Quick Lube LP), --- F.3d ---, 2016 WL 930298 (7th Cir. Mar. 11, 2016) (Posner, J.).

Can Gathering Agreements Be Rejected as Executory Contracts?

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).

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.

Most due diligence processes in a business acquisition context require a review of material contracts and, in particular, a review of any restrictions on assignment of those contracts.

When a business enters into a long term commercial contract with a customer, the identity of that particular counterparty may influence the terms of the contract. A party deemed more favourable may obtain a better price or better terms.  Unless restricted by enforceable anti-assignment provisions, these favourable contracts can be very valuable in a traditional M&A context.