The Supreme Court’s decision last term in Baker Botts v. Asarco, in which the Court ruled that professionals that are paid from a debtor’s bankruptcy estate cannot be compensated for time spent defending their fee applications, continues to rankle bankruptcy practitioners.  Moreover, a recent decision in a Delaware bankruptcy case shows that the impact of Asarco will not be easily circumvented.

The Bankruptcy and Creditors' Rights Bulletin provides an analysis of legal issues, recent court decisions and significant changes in bankruptcy and creditors' rights law. This edition highlights two key bankruptcy topics that should be of interest to many business clients.

Striking Oil: Mineral Lien Laws that Provide Protection to Oil & Gas Creditors

An “Assignment for the Benefit of Creditors” (an “ABC”) is an alternative to bankruptcy available under California law—as well as the laws of other states.  An ABC is often a more cost-efficient alternative to filing a bankruptcy case, and ABCs are often employed by secured lenders when speed and flexibility are required in a sale of the assets of the entity and the tools available in a bankruptcy proceeding (such as the ability to reject leases or bind certain classes of creditors) are unnecessary.  An ABC continues to be a very important tool that is routinely employed to assist

If you are considering bankruptcy for your insolvent business, an Assignment for the Benefit of Creditors (“ABC”) might be your answer.  An ABC is a less expensive, quicker, quieter, and simpler alternative to traditional bankruptcy.  An ABC is a state law procedure utilized to liquidate a failed, insolvent, or no longer viable business.  Fla. Stat. § 727.101.

For the past several years, creditors in the Ninth Circuit were confounded by an interpretation of the bankruptcy code that permitted individual chapter 11 debtors to retain a significant portion of their assets without creditor consent.  The problem was particularly vexing in the context of high net worth individuals, some of whom held multiple ownership interests in entities that held valuable assets or generated significant income.  That loophole was finally closed on January 28, 2016 when the Ninth Circuit Court of Appeals determined that the “absolute priority rule” applies i

The U.S. Court of Appeals for the Seventh Circuit recently held that a lender that is on inquiry notice that its security interest in the collateral had been fraudulently conveyed may lose its secured status.

However, the Court also held that the lender's negligence here did not amount to "purposeful avoidance of the truth" sufficient to justify application of the doctrine of equitable subordination, which allows a bankruptcy court to reduce the priority of a claim in bankruptcy.

As a result of Gordon & Rees’ amicus efforts (through California defense counsel organizations), along with those of other amici, the Court of Appeal issued an order modifying its opinion in Hernandezcueva v. E.F.

The Eleventh Circuit’s recent decision in Ullrich v. Welt(In re NICA Holdings, Inc.), Case No. 14-14685, 2015 WL 9241140 (11th Cir. Dec. 17, 2015) demonstrates the importance of carefully selecting legal regimes when deciding to place a company in an insolvency proceeding, such as an Assignment for the Benefit of Creditors (“ABC”), a bankruptcy proceeding, or possibly both with one as an alternative.

The U.S. Court of Appeals for the Second Circuit recently held that a debtor in bankruptcy can pursue claims under the federal Fair Debt Collection Practices Act ("FDCPA") in district court for trying to collect a discharged debt, reversing a judgment dismissing the FDCPA claims and requiring the plaintiff seek relief in bankruptcy court.

In the latest ruling in the long-running dispute in Sentinel Management’s bankruptcy case, the Seventh Circuit recently held that a bank employee’s suspicions about the source of the bank’s collateral should have put the bank on inquiry notice, thus precluding the bank from asserting a “good faith” defense to a fraudulent transfer claim that a liquidating trustee brought against the bank.