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The New York State Legislature recently proposed a bill, entitled the Sovereign Debt Stability Act, [1] intended to facilitate sovereign debt restructuring.

In its recent opinion in Raymond James & Associates Inc. v. Jalbert (In re German Pellets Louisiana LLC), 23-30040, 2024 WL 339101 (5th Cir. Jan. 30, 2024), the Fifth Circuit held that a confirmed bankruptcy plan enjoined a party from asserting certain indemnification counterclaims against a plan trustee because the party did not file a proof of claim.

Background

As you know from our prior alerts, creditors of borrowers formed as Delaware LLCs (as opposed to corporations) lack standing under Delaware law to sue directors for breaching fiduciary duties even when, to the surprise of many, the LLC is insolvent. See our prior Alert. The disparity of substantive creditor rights depending entirely on corporate form results from two aspects of Delaware law.

For industry professionals in India, the Insolvency and Bankruptcy Code (IBC), 2016, has been a game-changer. The introduction of a formal framework for insolvency resolution has brought much-needed clarity and efficiency to dealing with financial distress. However, the 2019 Regulations introduced a new dimension - the ability for personal guarantors (PGs) to initiate insolvency proceedings. This has significantly impacted the role of Resolution Professionals (RPs).

There is a growing trend of bankruptcy courts approving structured dismissals of chapter 11 cases following a successful sale of a debtor’s assets under section 363 of the Bankruptcy Code. A structured dismissal is a cost‑effective way for a debtor to exit chapter 11 and is an alternative to (a) confirming a post‑sale liquidating plan, which is expensive and not always viable, or (b) converting the case to chapter 7, which introduces significant uncertainty and unpredictability with the appointment of a chapter 7 trustee to replace management.

Whether a solar system is a “fixture” sounds like a mundane legal issue – but it has significant implications for the residential solar industry and for the financing of residential solar systems. If a system is regarded as a “fixture” of the house to which it is attached, then the enforceability and priority of the finance company’s lien on the system will be subject to applicable real estate law.

When leveraged buyouts (“LBOs”) fail, the selling shareholders are litigation targets. A common suit is a claim by a bankruptcy trustee asserting constructive fraudulent transfer claims seeking to claw-back payments to the selling shareholders from the loan proceeds that financed the LBO.

In the concluding part of our exploration into the 2023 insolvency landscape, Part 5 delves into two significant cases that shape the dynamics of the Insolvency and Bankruptcy Code (IBC), offering insights into constitutional challenges and the treatment of properties acquired through auction sales.

Dilip B. Jiwrajka v. Union of India

Constitutional Validity of Sections 95 to 100 in Part III of IBC

Background:

Continuing our exploration of the evolving insolvency landscape in 2023, Part 4 examines two pivotal cases that further shape the legal framework surrounding insolvency proceedings in India.

M/S. Vistra ITCL (India) & Ors. v. Mr. Dinkar Venkatasubramanian & Anr

Secured Creditor Rights and Treatment of Pledged Shares

Continuing our exploration of the evolving insolvency landscape in 2023, Part 3 delves into two more landmark cases that further define the legal contours of insolvency proceedings in India.

M. Suresh Kumar Reddy vs. Canara Bank & Ors

Clarification on NCLT's Discretion in Admitting Section 7 Applications