Last week the Supreme Court exercised its option to do nothing about a Seventh Circuit decision allowing the federal government to cram a $150 million remediation obligation onto a chapter 11 successor corporation – all because the feds chose to proceed under RCRA (the federal hazardous waste statute) rather than CERCLA (the Superfund cleanup statute). Smart tactics by the feds.
In the W.R. Grace bankruptcy, the United States Court of Appeals for the Third Circuit recently reaffirmed its prior rulings on the controversial issue of a bankruptcy court’s power to enjoin actions by third parties against non-debtors.1 Resting on prior precedent, the Third Circuit held that bankruptcy courts lack subject matter jurisdiction to enjoin third party actions that have no direct effect upon the bankruptcy estate.
On October 21, 2010, the Ninth Circuit overruled what many thought to be well-settled law, and held that a bankruptcy trustee does not have standing to pursue alter ego claims, at least in cases governed by California law. The court first held that California state law does not recognize a general alter-ego cause of action that allows an entity and its equity holders to be treated as alter egos for purposes of all of the entity’s debts.
In difficult economic times, debtors’ attorneys closely review credit reports looking for potential legal claims against creditors. Long after a debtor has been discharged from bankruptcy, creditors can find themselves defending claims of improper credit reporting. A recent case from the Eastern District of North Carolina illustrates the trouble facing creditors who furnish incorrect reports of discharged debt. See In re Adams (Bankr. E.D.N.C. 2010).
Introduction
On September 14, 2010, a New York state court entered an Order of Rehabilitation for Atlantic Mutual Insurance Company and Centennial Insurance Company (collectively, "Atlantic") to try to resolve Atlantic's insolvency and return it to the marketplace. The court appointed the New York Superintendent of Insurance as the "Rehabilitator" and directed the Rehabilitator to, among other things, take possession and control of Atlantic's property, conduct Atlantic 's business, and remove the causes and conditions that made this rehabilitation proceeding necessary.
In nearly every bankruptcy proceeding there is some constituency that ends up having its claim or interest impaired. Not surprisingly, therefore, these same constituencies would like to avoid that outcome by restricting the debtor’s ability to commence bankruptcy in the first place.
The early 2000s witnessed a wave of chapter 11 filings by entities with liability for asbestos personal-injury claims. The large number of filings was matched by the variety of legal strategies that companies pursued to address their asbestos liabilities in chapter 11. The chapter 11 case of Quigley Company, Inc. ("Quigley"), was one of the last large asbestos cases to file in the 2000s and represents one of the more interesting strategies for dealing with asbestos liabilities in chapter 11.
- Introduction
Congress enacted the current Bankruptcy Code, Sections 101 through 1502 of Title Eleven of the United States Code (as amended, the “Bankruptcy Code”), in 1978, and it took effect late in 1979. Many important federal environmental statutes were enacted around the same time, e.g., Congress enacted the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) in 1980. Thus, Congress did not fully consider environmental liability schemes when it created the bankruptcy code.
On February 1, 2011, AES Thames, LLC ("AES" or "Debtor") filed petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. According to the Declaration of AES's President in Support of First Day Motions (the "Declaration"), AES owns and operates a coal-fired power plant in Montville, Connecticut.