Background

Introduction

The Advisory Committee on Bankruptcy Rules recently issued a report to the Standing Committee on Rules of Practice and Procedure on amendments and new rules that were published for comment the previous year. The Advisory Committee’s report recommends substantial revisions to the amendments that were initially proposed to Bankruptcy Rule 2019. The revisions are responsive to the numerous comments, suggestions and objections made by hedge funds, institutional investors and other distressed debt investors.

Background

The automatic stay is one of the most fundamental bankruptcy protections. It enjoins the initiation or continuance of any action by any creditor against the debtor or the debtor’s property, including causes of action possessed by the debtor at time of the bankruptcy filing. The automatic stay offers this protection while bringing all of the debtor’s assets and creditors into the same forum, the bankruptcy court.

Introduction

The recent decision in the case of In re Erickson Retirement Communities, LLC, 425 B.R. 309 (Bankr. N.D. Tex. 2010) provides ammunition for those opposing the appointment of an examiner in a debtor’s Chapter 11 case and a cautionary tale for lenders entering into subordination agreements.

The Court of Appeals for the Fifth Circuit recently held that Chapter 15 of the Bankruptcy Code does not prohibit a foreign representative from bringing an avoidance action so long as the claim for relief is based on the substantive laws of the jurisdiction where the foreign proceeding is located. The Fifth Circuit’s decision is consistent with the dual policy considerations of comity and predictability. Fogerty v. Petroquest Res., Inc. (In re Condor Ins. Ltd.), 601 F.3d 319 (5th Cir. 2010).

Background