The U.S. Court of Appeals for the Fifth Circuit recently rejected a borrower’s objections to a bankruptcy court’s jurisdiction and held that the doctrine of res judicata barred the borrower’s claim objection as it was ultimately based on the alleged impropriety of the creditor’s claim from a prior bankruptcy.
A copy of the opinion in BVS Construction v. Prosperity Bank is available at: Link to Opinion.
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On October 14, 2022, the Fifth Circuit issued its decision in Ultra Petroleum, granting favorable outcomes to “unimpaired” creditors that challenged the company’s plan of reorganization and argued for payment (i) of a ~$200 million make-whole and (ii) post-petition interest at the contractual rate, not the Federal Judgment Rate. At issue on appeal was the Chapter 11 plan proposed by the “massively solvent” debtors—Ultra Petroleum Corp. (HoldCo) and its affiliates, including subsidiary Ultra Resources, Inc.
On October 14, 2022, the U.S.
“…[B]ecause Congress has not clearly abrogated the solvent-debtor exception,” the U.S. Court of Appeals for the Fifth Circuit held that a reorganized solvent debtor had to “pay what it promised now that it is financially capable.” In re Ultra Petroleum Corp., 2022 WL 8025329, *1, (5th Cir. Oct. 14, 2022) (2-1). Moreover, “given [the debtor’s ] solvency, post-petition interest is to be calculated according to the agreed-upon … contractual default rate …,” not the “much lower Federal Judgment Rate . . .,” held the court. Id.
Federal district courts, with the consent of the parties, are authorized by statute to refer "civil matter[s]" to magistrate judges for the purpose of conducting all proceedings and entering a judgment in the litigation. In the case of an appeal to a district court from a bankruptcy court, however, this statutory authority arguably conflicts with another statutory provision dictating that appeals from a bankruptcy court order or judgment be heard by a "district court" or a "bankruptcy appellate panel." This apparent conflict was recently addressed by the U.S.
In a decision holding that surety bonds are not executory contracts, the Fifth Circuit signaled that courts may in the future utilize the functional approach to determine if multiparty contracts are executory in nature. The case, filed in the United States Bankruptcy Court for the Middle District of Louisiana as In re Falcon V, L.L.C., concerned a $10.5 million surety agreement between the Debtor, Falcon V, L.L.C., and Argonaut Insurance Company (“Argonaut”).
I previously commented on a controversial fraudulent transfer opinion issued by the Fifth Circuit Court of Appeals. In Janvey v. The Golf Channel, 780 F.3d 641 (5th Cir.
On November 4, 2010, the United States Bankruptcy Court for the Northern District of Illinois certified the appeal of debtors River Road Hotel Partners, LLC, et al. of the court’s Order Denying Debtors’ Bid Procedures Motion (the Order) entered October 5, 2010. In its Order, the bankruptcy court expressly denied the debtors’ attempts to prevent their secured creditors from credit bidding in a proposed sale of assets under a chapter 11 plan.
The Third Circuit Court of Appeals dealt a blow to secured creditors in its recent decision holding that a debtor may prohibit a lender from credit bidding on its collateral in connection with a sale of assets under a plan of reorganization. In the case of In re Philadelphia Newspapers, LLC, No. 09-4266 (3d Cir. Mar. 22, 2010), the court, in a 2-1 decision, determined that a plan that provides secured lenders with the “indubitable equivalent” of their secured interest in an asset is not required to permit credit bidding when that asset is sold.