Congress and the President finally extend the $7.5 million debt limit for Subchapter V eligibility:

• by “unanimous consent” in the Senate;
• by a vote of 392 – 21 in the House; and

A legislative history of the new law is at this link.

The new law is bi-partisan and uncontroversial. But there are some bells and whistles, as discussed below.

“SUNSET” – Again!

It seems like a small thing: Chapter 11 debtors in two states paying lower quarterly fees than Chapter 11 debtors in the other 48 states.

What’s the big deal?

Alabama and North Carolina throw a political hissy fit, three or four decades ago. They want their own Bankruptcy Administrator system (not the U.S. Trustee system established everywhere else). And they are rewarded. The reward includes lower quarterly fees.

Where’s the harm in lower quarterly fees? What follows is an attempt to:

“The Congress shall have Power To . . . establish . . . uniform Laws on the subject of Bankruptcies throughout the United States.”

–U.S. Constitution’s Bankruptcy Clause (Art. 1, Sec. 8, cl. 4).

An Old Losing Streak—Article III

“No State shall . . . pass any . . . Law impairing the Obligation of Contracts.”

–Art. I, Sec. 10, U.S. Constitution

Increasingly, states are expanding their laws on debtor/creditor relationships, such as receiverships and assignments for benefit of creditors.

Some of these expansions look suspiciously like a Bankruptcy Code Lite—e.g., adding “stay” provisions.

And that can be a constitutional problem, according to long-standing (and recent) opinions of the U.S. Supreme Court.

What follows is a brief summary of three such opinions.

There’s a new U.S. Circuit Court opinion on a person’s right to a jury trial, when sued by the Securities and Exchange Commission before one of its administrative judges.

And guess what:

本文拟以某案例为切入点，揭示及探讨政府和社会资本合作（Public-Private Partnership，下称PPP）项目中社会资本方因项目合同主体问题而面临的潜在风险及可能的风险防范措施。

1. 案例情况简述

项目投资人A公司（外国公司）与B政府签订某项目投资框架协议，约定由A公司设立项目公司C以负责建设、运营某污水处理厂特许经营项目，并在对项目建设时间、技术要求、费用确认机制等关键条件做出约定的同时，明确“详细条款在正式合同中约定”。

随后，B政府作为甲方与A公司作为乙方签订PPP项目合同，约定项目按照合同要求建设并投入运营后，由B政府承担向乙方支付污水处理费的义务（最终用户向B政府付费），并且“当项目公司成立后，乙方在本协议项下的所有权利和义务自动转让给项目公司”。

根据前述协议，A公司设立由其100%控股的项目公司C，由C公司承继PPP项目合同中与建设、运营项目相关的所有权利义务。C公司主要通过向当地银行贷款的方式进行项目融资，以完成项目建设并将污水处理厂投入运营。

Faced with thousands of complex potential claims from creditors, and a soon-to-expire letter of comfort, the liquidators of Forex Capital Trading Pty Ltd (in liq) sought creative and efficient relief in the Federal Court of Australia to implement an expedited adjudication process to adjudicate and admit these claims without creditors having to individually establish causation for their loss or damage: Woodhouse (liquidator), in the matter of Forex Capital Trading Pty Ltd (in liq) [2022] FCA 600.

This is reality:

• Small businesses reorganize, all the time, under Subchapter V;
• Farmers reorganize, all the time, under Chapter 12; and
• Large businesses reorganize, all the time, under regular Chapter 11.

That’s because all of those three types of debtors have bankruptcy reorganization processes designed specifically for them.

Middle Market Debtors

What the heck does this mean:

“(1) Debtor.—The term ‘debtor’— . . . (B) does not include— . . . (Iii) any debtor that is an affiliate of an issuer, as defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c)”

—from Subchapter V’s eligibility statute, § 1182 (emphasis added).

Since the inception of Subchapter V, I’ve been trying to figure that meaning out.

Here’s the progression of thinking:

How are private practice mediators compensated in a bankruptcy case—procedurally?

We have a new court order providing guidance on how such procedures can work.

The new guidance is from Sears Holding Corp. v. Lampert (In re Sears Holdings Corp.), Adv. Pro. No. 19-08250, SDNY Bankruptcy Court. 

Mediation Order