Consensus remains elusive on the two major questions concerning the application of bankruptcy law in mass tort cases. In the past few months, at least five major decisions have addressed the significant issues of the availability of third-party releases and the two-step bankruptcies. Appeals have been filed or are threatened. In the meantime, the authors of a University of Chicago Law Review article argue that, as a matter of public policy, both should be available with court safeguards.

A crash in the cryptocurrency industry started this past spring, causing a significant number of cryptocurrency exchanges and related entities to seek bankruptcy protection, including the recent filing of one of the largest cryptocurrency exchanges, FTX. The volatility in the industry continues, with the subsequent filing of the cryptocurrency firm BlockFi and the crypto-mining company Core Scientific.

Crypto Basics

As has been widely reported, Congress recently reauthorized the $7.5 million debt threshold for subchapter V small business debtors, making subchapter V available to a significantly larger number of struggling businesses. With this change, the other requirements for a debtor to be eligible to elect subchapter V, takes on new importance.

Introduction

Should the laws of the United States have effect outside of the United States? For that matter, should the laws of other countries have effect outside of their borders, and inside the United States? These are pretty fundamental questions about what should be the world order. A recent decision of the Second Circuit Court of Appeals, a bankruptcy case with a high likelihood of reaching the U.S. Supreme Court, takes on that issue. It is a case to watch.

As commonly understood amongst bankruptcy professionals, when a creditor violates the discharge injunction in a bankruptcy case, courts have the authority to levy civil contempt violations against the violating creditor. However, a more difficult question for those professionals, and one that presiding courts have occasionally struggled to answer, is under which circumstances a creditor’s abusive action actually rises to the level of civil contempt.