The Third Circuit recently took a “pragmatic approach” when affirming lower court orders denying a stay of bankruptcy settlement distributions pending appeal. In re S.S. Body Armor I, Inc., 2019 WL 2588533 (3d Cir. June 25, 2019). After holding that the district court’s “stay denial order” was “final” for jurisdictional purposes, it also confirmed “the applicable standard of review” on motions for stays pending appeals.
Relevance
A “little bit of a crisis” was averted last week in the Chapter 11 bankruptcy case of St. Christopher’s Hospital for Children, a Philadelphia-area hospital with ties to Hahnemann University Hospital, which is also a Chapter 11 debtor.[1] On Tuesday, Delaware bankruptcy judge Kevin Gross said he could not approve a $65 million DIP loan requested by St.
The President signed legislation on August 23, 2019 modifying the Bankruptcy Code in several respects. Here are the four biggest takeaways.
Help for the preference recipient
Almost all businesses have either received a letter from a bankruptcy trustee or have been sued by the trustee for the repayment of sums they received from their customer within 90 days of the customer’s bankruptcy filing. The recipient has several affirmative defenses to return of these so-called “preference” payments that may reduce, or even eliminate, the amount that must be repaid.
On Friday, August 23, President Trump signed into law the “Small Business Reorganization Act of 2019.” The SBRA will take effect in February 2020 and, at long last, may provide some (although probably minimal) relief to businesses, large and small, from the threat of questionable and small dollar bankruptcy preference claims.
On August 26, 2019, President Trump signed the Small Business Reorganization Act (“SBRA”) into law. The SBRA is scheduled to take effect on February 22, 2020.
The Bottom Line
This article first appeared in Law360.
In the United States, in a typical plain vanilla lending arrangement, if a counterparty files for bankruptcy, an automatic stay of enforcement actions is imposed that would prevent a lender from (i) foreclosing on the property of the debtor, (ii) terminating contracts with the debtor, (iii) commencing or continuing certain enforcement actions against the debtor or its property and/or (iv) setting off amounts owed under such arrangements (in each case unless a motion is filed and granted in the related bankruptcy case).
The District Court for the Southern District of New York has ruled that a trustee could not amend a complaint to add federal constructive fraudulent transfer claims because those claims were preempted by the safe harbor provision of the Bankruptcy Code.[1] The District Court found, under a plain language reading of the safe harbor provision, 11 U.S.C.
Defendants Honeywell and Ford Motor appealed the District Court’s decision affirming the denial of “unconditional access” to numerous exhibits submitted in connection with “administering nine asbestos bankruptcies.” The court had previously permitted review of the documents for three months with certain limitations.