“Learn something new every day,” is a well-worn adage.

And it’s mostly true (I only question giving a literal meaning to the “every day” part).

Nevertheless, I’m embarrassed to acknowledge learning only recently of the existence of a noteworthy, bankruptcy-related statute: 28 U.S.C. § 959(a). Such statute reads in part (emphasis added):

2023年5月，香港高等法院夏利士法官第一次在诺熙资本有限公司诉北大方正集团有限公司 案 [2023] HKCFI 1350（下称“北大方正案”） 中讨论了维好协议的可执行性，此后，在2023年6月15日，夏利士法官就花旗集团诉清华紫光集团有限公司 [2023] HKCFI 1572一案（下称“清华紫光案”）作出了判决，该案关于清华紫光集团有限公司（下称“清华紫光”）的间接子公司发行的4.5亿美元债券，是夏利士法官就

Excluded from Subchapter V eligibility is a “single asset real estate” debtor.

We have a recent opinion on a Subchapter V debtor who beats that exclusion: In re Evergreen Site Holdings, Inc., [Fn. 1]

What follows is a summary of that opinion.

Eligibility Issue & Standards

The Evergreen issue is this:

In a mass-tort bankruptcy, when 95% of 120,000 creditors vote to accept a mediated plan paying over $7 billion to creditors, shouldn’t the plan be confirmed?

Under the Euroclear or Clearstream system, companies which issue so-called “global notes” do not have direct contractual relationship(s) with the ultimate beneficial investors in those notes. Rather, the company’s books will show only one registered global note, and only one registered holder of the global note holding the note on behalf of the investors.

Subchapter V eligibility requires a debtor to be “engaged in” commercial/business activities.

Case Law Consensus

Case law consensus is that such activities must exist on the petition filing date. That means a debtor cannot utilize Subchapter V when:

• business assets are fully-liquidated;
• unpaid debts are the only remnant of the failed business; and
• prospects for resuming such activities are nil.

So . . . here’s the question: Is that the right eligibility standard?

I say, “No.”

A Hypothetical

Contrasting opinions from any court, issued a month apart, are always instructive.

And we have a new such thing—from the U.S. Supreme Court, no less, and from May and June of this year. The contrast is on this subject: whether sovereign immunities of Puerto Rico and of a federally recognized tribe are abrogated in bankruptcy.

“Were Congress to . . . intervene and expand § 524(g) beyond asbestos cases, bankruptcy would become a more suitable alternative for resolving mass tort cases. Until then, such cases will likely remain problematic under the Code in the face of creditor opposition.”

Subchapter V of the Bankruptcy Code’s Chapter 11 is relatively new: it took effect as a new law on February 19, 2020. Accordingly, new questions continue to arise on how its terms and provisions should be applied.

A Trustee Fees Question

One Subchapter V question is this:

• When does a Subchapter V trustee’s administrative claim for fees and costs get paid?

A Regular Chapter 11 Answer

The answer in regular Chapter 11 has always been this:

As foreshadowed in his decision last month (Nuoxi Capital Ltd & ors v Peking University Founder Group Company Limited[2023] HKCFI 1350 (the “PUFG Case”)), on 15 June 2023, Harris J handed down a second decision on keepwell deeds, this time in relation to US$450,000,000 bonds issued by Tsinghua Unigroup Co., Ltd (“Tsinghua”)’s indirect subsidiary: s