Recently, the United States Court of Appeals for the Second Circuit entered a decision in the General Motors bankruptcy case that found an exception to the “free and clear” language of Section 363(f) of the Bankruptcy Code2 where adequate notice of the sale order is not provided.3 However, the exception may not be far reaching due to the “peculiar” facts of the case.

Factual Background and Lower Court Decision

Learning the interplay between state rules of judicial procedure and federal bankruptcy law can be a daunting undertaking, but the pitfalls of failing to do so can be severe. A recent example of the importance of being mindful of these issues is Hewett v. Wells Fargo Bank, N.A. as Trustee, No. 2D15–1074, 2016 WL 3065014 (Fla. 2d DCA June 1, 2016) where the filing of a bankruptcy petition ultimately cost a foreclosure defendant his right to appeal a final judgment of foreclosure.

The Second DCA summarized the procedural posture of the case as follows:

Recently, the Bankruptcy Court for the Southern District of New York issued an opinion in In re Sabine Oil & Gas Corp.¹ that permitted the debtor, Sabine Oil & Gas Corporation (“Sabine”) to reject certain gathering and condensation agreements as executory contracts under 11 U.S.C. § 365. Because the midstream service sector finances the construction of pipelines, the costs of which are recovered over the life of gathering agreements, the Court’s decision has the potential to lead to considerable upheaval in the energy sector.

In a pivotal decision released May 19, an Alberta court ruled in favour of Grant Thornton Limited, the Receiver and Trustee in the Redwater Energy Corporation (Redwater) receivership and bankruptcy proceedings, upholding its right to disclaim Redwater’s non-producing oil wells and sell its producing ones. Gowling WLG served as co-counsel to Grant Thornton throughout the proceedings.

36778   Ad Hoc Group of Bondholders v. Ernst & Young Inc. in its capacity as Monitor et al.

(ON)

Commercial law – Bankruptcy and insolvency – Interest

As solar industry observers will already know, on April 21st, 2016, (the “Filing Date”) SunEdison, Inc. (“SunEdison”) and several of its U.S. and international subsidiaries (the "SunEdison Group") filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (the “Chapter 11 Proceedings”)in the United States Bankruptcy Court for the Southern District of New York (the “ US Bankruptcy Court”).¹

In March 2016, the U.S. Court of Appeals for the Seventh Circuit ruled that a landlord may be liable to a debtor’s bankruptcy estate for the value of a lease the debtor terminated early, holding the termination may be an “avoidable transfer” under the Bankruptcy Code.¹ The opinion in Official Comm. of Unsecured Creditors v. T.D. Invs. I, LLP (In re Great Lakes Quick Lube LP)² reversed the Bankruptcy Court’s ruling, and in doing so perhaps expanded the definition of a “transfer” under the Bankruptcy Code.

Background 

36728    Enmax Power Corporation, Altalink Management Ltd., in its capacity as general partner of Altalink, L.P., EPCOR Distribution & Transmission Inc. v. Alberta Utilities Commission, Office of the Utilities Consumer Advocate of Alberta

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FortisAlberta Inc., Altagas Utilities Inc., ATCO Gas and Pipelines Ltd., ATCO Electric Ltd. v. Alberta Utilities Commission, Office of the Utilities Consumer Advocate of Alberta

The Convention on International Interests in Mobile Equipment (the “Convention”) and theProtocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment (the “Protocol” collectively with the Convention, the “Cape Town Convention”) signed on November 16, 2001 establish a special regime for the protection of certain interests in aircraft objects (within the meaning given to such term in the Cape Town Convention, an “Aircraft Object”), and

Trust claims against a borrower’s assets are something that no secured creditor wants to be confronted with. Such claims are often unexpected because they are, for the most part, undetectable. They lurk in the shadows, out of the reach of traditional due diligence measures and PPSA searches. As a result, even the most prudent of creditors can sometimes find themselves facing these undocumented and unquantifiable claims.