Commercial insolvencies are expected to steadily increase in the near-term due to higher interest rates, supply chain disruption and corresponding increased commodity costs. A rise in commercial insolvencies will increase the likelihood that businesses will be impacted by a formal insolvency proceeding, whether as a creditor, supplier, customer or other stakeholder. It is, therefore, important for businesses to understand how to strategize in the context of both newly initiated and ongoing insolvency proceedings.

Commercial insolvencies are expected to steadily increase in the near-term due to higher interest rates, supply chain disruption and corresponding increased commodity costs. A rise in commercial insolvencies will increase the likelihood that businesses will be impacted by a formal insolvency proceeding, whether as a creditor, supplier, customer or other stakeholder. It is, therefore, important for businesses to understand how to strategize in the context of both newly initiated and ongoing insolvency proceedings.

On May 30, 2023, the United States Court of Appeals for the Second Circuit (the “Second Circuit” or the “Court”) rendered a much anticipated opinion (the “Opinion”),¹ reversing the order of the United States District Court for the Southern District of New York (the “District Court”) that the Bankruptcy Code does not permit non-consensual third-party releases of direct claims and affirming the order of the United States Bankruptcy Court for the Southern District of New York (the

On March 28, 2023, the United States District Court for the District of Delaware (the “District Court”) rendered an opinion (the “Opinion”)¹ affirming the confirmation order of Laurie S.

Le 27 avril 2023, le projet de loi C-228, Loi sur la protection des pensions (« LPP ») a reçu la sanction royale et est entré en vigueur au Canada. Comme la LPP vient modifier considérablement le traitement des exigences au titre des régimes de retraite dans le cadre des procédures d’insolvabilité, il y a lieu pour les prêteurs de veiller à bien comprendre la nature et les répercussions de cette loi.

In a provocative demonstration that it scrutinizes all types of transactions, no matter their origin, the Committee on Foreign Investment in the United States (“CFIUS”) has reportedly been vetting the proposed $1 billion sale of bankrupt crypto lender Voyager Digital’s assets to Binance.US. Voyager Digital filed for Chapter 11 bankruptcy in July 2022, and, after an initial agreement to sell its assets to FTX crumbled, Binance.US provided Voyager Digital with the winning offer for its assets in December 2022. But, after the sale’s announcement on December 30, 2022, the U.S.

In Sanofi-Aventis U.S. LLC v. Mallinckrodt PLC,¹ the United States District Court for the District of Delaware ruled that a debtor that purchased intellectual property under a prepetition asset purchase agreement could continue to retain and use the property post-confirmation while discharging its obligations to pay any future royalties otherwise owed. The decision highlights the importance of structuring transactions up-front to minimize the consequences of future bankruptcies.

Background

On September 8, 2022, a three-judge panel in the United States Court of Appeals for the Second Circuit (the “Second Circuit”) reversed the United States District Court for the Southern District of New York (the “District Court”) when it determined that lenders of a syndicated loan facility to Revlon, Inc.

Commercial insolvency can affect stakeholders located in multiple jurisdictions and possessing diverse legal rights. A recent notable trend in Canadian insolvency law is the centralization in insolvency proceedings, where courts have recognized that an effective restructuring of an insolvent business may depend on the centralization of stakeholder claims in a single proceeding. This applies even when such an approach would be inconsistent with the parties’ contractual rights, statutory laws or Canada’s federal structure outside of the insolvency context.

In Matter of J.C. Penney Direct Marketing Services, L.L.C.,¹ the United States Fifth Circuit Court of Appeals clarified the extremely deferential standard afforded to a debtor’s “business judgment” decision to reject an unexpired lease under section 365 of the Bankruptcy Code and affirmed the Bankruptcy Court’s ruling allowing rejection of a ground lease notwithstanding allegations of a debtor-sublessor’s bad faith dealings in its negotiations with a sublessee.

Background