Judge Parker of the U.S. Bankruptcy Court for the Western District of Texas recently issued an order in the case of Hilltop SPV, LLC, granting debtor Hilltop SPV LLC’s (“Hilltop”) motion to reject a Gas Gathering Agreement (“GGA”) with counter-party Monarch Midstream, LLC (“Monarch”).[1] This decision allows Hilltop to reject the GGA while allowing Monarch to retain the covenants that run with the land post-rejection.
Harrington v. Purdue Pharma L.P., 144 S. Ct. 2017 (June 27, 2024)
On June 27, 2024, the Supreme Court of the United States (“SCOTUS” or the “Court”) released its widely-anticipated decision in Harrington, United States Trustee, Region 2 v. Purdue Pharma L.P.
Deal structure matters, particularly in bankruptcy. The Third Circuit recently ruled that a creditor’s right to future royalty payments in a non-executory contract could be discharged in the counterparty-debtor’s bankruptcy. The decision highlights the importance of properly structuring M&A, earn-out, and royalty-based transactions to ensure creditors receive the benefit of their bargain — even (or especially) if their counterparty later encounters financial distress.
Background
Les opérations de gestion du passif gagnent en popularité dans le monde du financement par emprunt. Lorsque les emprunteurs et les émetteurs de titres de créance éprouvent des difficultés à honorer les obligations liées à leurs facilités de crédit, à leurs obligations d’épargne ou à d’autres titres de créance, ils ont recours à des opérations de gestion du passif pour restructurer leurs engagements afin d’obtenir des liquidités supplémentaires sans avoir à obtenir le consentement unanime de leurs créanciers actuels.
On April 16, 2024, Canada’s Deputy Prime Minister and Minister of Finance, Chrystia Freeland, delivered the Liberal Government’s federal budget, Fairness for Every Generation (Budget 2024). The most notable tax measure in Budget 2024 is the proposal to increase the capital gains inclusion rate from one-half to two-thirds, for capital gains realized on or after June 25, 2024. This measure will apply to all capital gains realized by corporations and trusts, but only will apply to individuals in respect of the portion of capital gains realized in the year that exceeds $250,000.
In early February, a Delaware bankruptcy judge set new precedent by granting a creditors’ committee derivative standing to pursue breach of fiduciary duty claims against a Delaware LLC’s members and officers. At least three prior Delaware Bankruptcy Court decisions had held that creditors were barred from pursuing such derivative claims by operation of Delaware state law, specifically under the Delaware Limited Liability Company Act (the “DLLCA”).
A Massachusetts Bankruptcy Court’s recent appellate decision in Blumsack v. Harrington (In re Blumsack) leaves the door open for those employed in the cannabis industry to seek bankruptcy relief where certain conditions are met.
On March 11, 2024, the Alberta Government released two Regulations: the Market Power Mitigation Regulation (MPM Regulation) and the Supply Cushion Regulation (the Supply Cushion Regulat