A company’s failure to meaningfully market its assets led to the dismissal of its attempted chapter 11 reorganization. As a result, a Massachusetts court held in a detailed opinion that an acquiring company was the successor to the company it acquired, and therefore liable for an $8.8 million debt.
In Litton Loan Servicing, LP v. Garvida, No. 04-17846 (9th Cir. BAP July 31, 2006), the Bankruptcy Appellate Panel of the U.S. Court of Appeals for Ninth Circuit addressed two independent but related questions: (1) what procedure is necessary to object to a properly filed proof of claim, and (2) who bears the burden of proof, and the correlative risk of nonpersuasion, with regard to a disputed claim.
Following the rule that swap agreements should be netted after contract termination, a New York bankruptcy court has held that such agreements also should be netted following rejection in bankruptcy.
“Although rejection of an agreement does not equal termination,” Bankruptcy Judge Arthur J. Gonzalez acknowledged in In re Enron Corp., 349 B.R. 96 (Bankr. S.D.N.Y. Aug. 2, 2006), “this does not affect the determination of…rejection damages. Termination of swap agreements generally requires that the parties’ positions be netted.”
“Rejection leads to a similar result,” he stated.
Can the nondebtor party to an executory contract withhold services to the debtor postpetition if the debtor breached the contract prepetition?
Many view this as a settled area of bankruptcy law, and believe that the answer is “no” as long as the debtor is performing postpetition. Commentators of this view question how a debtor could ever reorganize if nondebtors did not have to perform under contracts postpetition, particularly if the debtor’s business is entirely dependant upon the contract at issue.
The ability of a creditor whose claim is “impaired” to vote on a chapter 11 plan is one of the most important rights conferred on creditors under the Bankruptcy Code. The voting process is an indispensable aspect of safeguards built into the statute designed to ensure that any plan ultimately confirmed by the bankruptcy court meets with the approval of requisite majorities of a debtor’s creditors and shareholders and satisfies certain minimum standards of fairness.
In a decision last month in Whyte v. SemGroup Litig. Trust (In re Semcrude L.P.), No. 14-4356, 2016 U.S. App. LEXIS 7690 (3d Cir. Apr. 28, 2016), the United States Court of Appeals for the Third Circuit held that proving that a debtor was left with unreasonably small capital will not turn on either hindsight or a “speculative exercise” based on what might have happened if certain things were known at the time.
A recent ruling of the Bankruptcy Court for the Central District of California endorsed a path toward enforceability of prospective waivers of the automatic stay in certain circumstances. In short, such a waiver approved in a bankruptcy case may be enforceable in a subsequent bankruptcy case. This offers creditors a tactical opportunity to significantly better their position in such a subsequent case.
The U.S. Bankruptcy Court for the Eastern District of Michigan recently considered the issue of whether a Chapter 7 trustee may bring a cause of action against a debtor for damages caused to the bankruptcy estate by the debtor’s alleged failure to comply with the debtor’s duties under section 521 of the Bankruptcy Code.
An involuntary bankruptcy case is typically commenced by a petition joined by at least three petitioning creditors.1 However, an involuntary petition may be filed by a single petitioning creditor if the debtor has 11 or fewer “qualified” creditors.2 This is often called the “numerosity” requirement. The Bankruptcy Code, in Section 303(b)(2), expressly defines which creditors count in the numerosity requirement.
While rockstars such as Iggy Pop and Nikki Sixx of Mötley Crüe were infamous for outlandish rider requests while on tour, perhaps nobody is more notorious for their demands of concert promoters than Van Halen.