Boy Scouts of American achieved a confirmed plan of reorganization in its bankruptcy.

That confirmation is now affirmed on appeal by the U.S. District Court in Delaware[fn. 1]—and is heading to the Third Circuit Court of Appeals for further review.

The District Court’s affirming opinion is 155 pages long and highly detailed. This article tries to summarizes the opinion’s highlights—attempting to make the complex clear.

100% Payment Plan

The core of the opinion, around which most everything else revolves, is this:

Question: Can a creditor prevent its debtor from filing bankruptcy by pre-petition contract terms?

Answer: No . . . according to In re Roberson Cartridge Co., LLC, Case No. 22-20192 in the Northern Texas Bankruptcy Court (03/07/2023, opinion at Doc. 77).

Facts

Say what?!.

“Hypothetical jurisdiction” for a bankruptcy appeal?!

Who knew? I sure didn’t.

But it is, apparently, a thing . . . and it may even be real.

At U.S. Supreme Court

A newly filed Petition in the U.S. Supreme Court is Waleski v. Montgomery, McCraken, Walker & Rhodes, LLP, Case No. 22-914 (Petition filed 3/16/2023).

–The Question

The Question Presented to the U.S. Supreme Court in Waleski v Montgomery is this:

What happens when a creditor class fails or refuses to vote on confirmation of a Subchapter V plan? Does that prevent a consensual confirmation?

We have a recent answer from In re Creason, Case No. 22-00988, Western Michigan Bankruptcy Court (opinion issued 2/23/2023).

Facts

The Subchapter V Debtor is a sole-proprietor dentist.

“Creative destruction” occurs when something new kills off whatever existed before it.

IPhone Example

Just think, for example, of all the creative destruction that the iPhone has wrought! It has destroyed businesses that provided telephones and phone books, cameras and film, audio recordings and players, newspapers and newsstands, and related services.

City of Chester is the oldest city in Pennsylvania, incorporated as a borough in 1701 and as a city in 1866, and is located on the Delaware River between Philadelphia and Wilmington.

Unfortunately, the City is also in Chapter 9—having filed bankruptcy on November 10, 2022.

The City’s bankruptcy filing causes a ruckus because:

The U.S. Supreme Court does not like bankruptcy benefits for individual debtors. It really doesn’t.

An example from a couple years ago is Fulton v. City of Chicago, where the U.S. Supreme Court finds a way to declare:

Can a corporate debtor be denied a Subchapter V discharge under § 523(a), despite this § 523(a) language (emphasis added):

• “A discharge under section . . . 1192 [Subchapter V] . . . does not discharge an individual debtor from . . . ”?

A recent Bankruptcy Court opinion (in Avion Funding) says, essentially, this: “No! You can’t paint over explicit statutory language.”[Fn. 1]

Such recent opinion:

Bryant v Badenoch Integrated Logging Pty Ltd [2023] HCA 2

The High Court has unanimously dismissed an appeal against the Full Court decision in Badenoch Integrated Logging Pty Ltd v Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) [2021] FCAFC 64, finding that the “peak indebtedness rule” does not form part of s 588FA(3) of the Corporations Act and providing guidance as to how to approach the analysis required under that section.

Background

Metal Manufactures Pty Ltd v Morton (as liquidator of MJ Woodman Electrical Contractors Pty Ltd (In Liq)) [2023] HCA 1

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