Every lender sincerely hopes that, even when its borrower is flat on the floor and seems down for the proverbial count, the borrower will still find the wherewithal to repay it. A lender often starts counting the days after it is repaid until the 90-day preference period (11 U.S.C. §547) has passed. The lender generally breathes a sigh of relief on the 91st day, confident that if its borrower files for bankruptcy, the money paid to the lender is safe from being clawed back by the Bankruptcy Court.

In Schwartz-Tallard v. America's Servincing Co.

Channel 1 – Thorpe Insulation Addresses Insurer Standing to Object to Plan and Assignability of Insurance Contracts to Plan Trusts

Bottom Line:

On May 1, 2012, the United States Court of Appeals for the Third Circuit in In re Federal–Mogul Global, Inc. confirmed that anti-assignment provisions in a debtor’s insurance liability policies are preempted by the Bankruptcy Code to the extent they prohibit the transfer of a debtor’s rights under such policies to a personal-injury trust pursuant to a chapter 11 plan.In re Federal-Mogul Global Inc., --- F.3d ---, 2012 WL 1511773 (3d Cir. 2012).

The recent decision of the United States Bankruptcy Court for the District of Delaware in Friedman’s Inc. v. Roth Staffing Cos., L.P. (In re Friedman’s Inc.)¹ should be a reminder of the preference risk that exists for creditors, such as critical vendors, whose pre-petition claims are paid by court order. This article discusses various ways in which this preference risk can be eliminated or minimized.  

Congratulations!  You just successfully negotiated a prepackaged chapter 11 plan of reorganization for a multi-billion dollar enterprise which leaves general unsecured creditors unimpaired and has been unanimously approved by the debtors' creditors.  It's smooth sailing from here, right?

Chapter 11 creditors’ committees and debtors continue to challenge lenders’ prepayment premiums, commitment fees and post-bankruptcy interest claims in reorganization cases. Nevertheless, courts regularly reject these challenges in well-reasoned decisions.

To a business litigator, the bankruptcy debtor’s most effective weapon is often the automatic stay, which is commonly used – or abused, depending on the perspective – to, inter alia, stay all pending litigation against the debtor and keep him in sole control of an asset, despite seeming abuses of that control.

On June 28, 2012, Judge Allan Gropper of the United States Bankruptcy Court for the Southern District of New York declined to appoint an official committee of equity holders in Kodak’s chapter 11 cases.  The bankruptcy court determined that the appointment of an official committee was not warranted at that time, given that the costs to the bankruptcy estates would be substantial and equity’s interests were already represented by other constituencies seeking to maximize value and by a sophisticatedad hoc group of shareholders.  In re Eastman Kodak Company, Case No

In the last two weeks, the 6th Circuit and 7th Circuit Court of Appeals each issued decisions on important intellectual property issues in bankruptcy.