We hear a lot these days about bankruptcy venue abuse via corporate-entity manipulation shortly before bankruptcy filing.

Here’s the latest opinion on that subject—which allows Debtor’s choice of venue to stand, based on a newly-created entity:

Is an involuntary bankruptcy, filed by an owner/creditor of the Debtor, filed in good faith or in bad faith?

That’s the question before the U.S. Supreme Court on which it denied certiorari on October 30, 2023 (Wortley v. Juranitch, Case No. 23-211).

Here’s the gist of the case.

The Court of Appeal recently considered when precisely a company had given a preference within the meaning of the Insolvency Act 1986 – a question of timing which may impact on whether an insolvency practitioner can later unwind the preferential treatment for the benefit of creditors as a whole.

Here we look at what a preference is, and when it is deemed to be given.

Preferences

The U.S. Trustee is on a crusade to eradicate every type of third-party release from all Chapter 11 bankruptcy plans—no matter what the facts or circumstances might be.

It’s a policy based on the idea that, if the Bankruptcy Code doesn’t specifically and explicitly authorize something, then that something cannot be done . . . ever . . . under any circumstances . . . no matter what . . . period . . . end of story.

We now have another manifestation of that bright-line and unyielding position. Fortunately, the Bankruptcy Court rejects the U.S. Trustee’s objection.

A bankruptcy court has jurisdiction to dismiss a legal malpractice claim of non-debtor plaintiffs against non-debtor attorneys.

That’s the ruling in Murray v. Willkie Farr & Gallagher LLP (In re Murray Energy Holdings Co.), Adv. Pro. No. 22-2007, Southern Ohio Bankruptcy Court (decided October 5, 2023, Doc. 89)—appeal is pending.

Summary of Issue and Ruling

Bankruptcy Court denies a party’s request to enforce arbitration of a legal malpractice claim—and then dismisses that malpractice claim for failure to state a claim.

The opinion is Murray v. Willkie Farr & Gallagher LLP (In re Murray Energy Holdings Co.), Adv. Pro. No. 22-2007, Southern Ohio Bankruptcy Court (decided October 5, 2023, Doc. 89)—appeal is pending.

Context

On 1 November 2023, the Supreme Court has overturned the 2021 Divisional Court judgment in R (on the application of Palmer) v Northern Derbyshire Magistrates Court and another to hold that administrators do not fall within the meaning of a "director, manager, secretary or similar officer of the company" under s194(3) the Trade Union and Labour Relations (Consolidation) Act 1992 (TULCRA 1992).

This ideal is floating around:

• upon removal of a Subchapter V debtor from possession, for fraud or other cause,
• the Subchapter V trustee has no expanded right, power, function or duty beyond operating debtor’s business (the “Ideal”).

This Ideal is both:

• contrary to unambiguous language of the Bankruptcy Code, as a matter of law; and
• in Never-Never Land, as a matter of practice.

I’ll try to explain.

This is a truism:

A study on using round-number offers and precise-number offers in negotiations reaches these two conclusions:

Here’s the latest opinion on a controversial question: In re Franco’s Paving LLC, Case No. 23-20069, Southern Texas Bankruptcy Court, (decided 10/5/2023; Doc. 74).

The Question & Answer

Voter apathy is a problem in Subchapter V cases. That apathy is in the form of creditors failing or refusing to vote on a Subchapter V plan. The In re Franco’s opinion addresses this apathy problem head-on.