In a world of free-ranging capital and cross-border transactions, the question of whether US courts will apply US law to transactions taking place in other countries is important. It is therefore a matter of both interest and concern that judges in the Southern District of New York have reached opposite conclusions when asked to give extraterritorial effect to the avoidance or 'clawback' provisions of the Bankruptcy Code.

Canon of statutory construction

On June 6, 2016, the Pension Benefit Guaranty Corporation (“PBGC”) issued a new proposed rule clarifying the agency’s authority to facilitate the merger of multiemployer pension plans. The rule would implement some of the statutory changes made by the Multiemployer Pension Reform Act of 2014 (“MPRA”).

Background

In the recent decision of Gavin Salmonese, LLC v. Shyamsundar, et al. (In re AmCad Holdings, LLC, et al.) (Bankr. D. Del.

“Puerto Rico’s Recovery Act is barred by § 903(1) … of the Bankruptcy Code,” held the U.S. Supreme Court on June 13, 2016. Commonwealth of Puerto Rico v. Franklin California Tax-Free Trust, 2016 WL 3221517, *11 (U.S. June 13, 2016) (5-2). Affirming the First Circuit, the court reasoned that Code § 903(i) “preempts state bankruptcy laws [enabling] insolvent municipalities to restructure their debts over the objections of creditors [and] instead requires municipalities to restructure [their] debts under Chapter 9 of the Code.” Id., at *2.

For those interested in a quick read with some juicy facts and egregious acts by the relevant practitioners, check out the recent opinion in Church Joint Venture, L.P. v. Blasingame (In re Blasingame), where the Sixth Circuit Court of Appeals held that an order denying approval of a proposed settlement agreement was not a final order susceptible to appeal as of right.

Trump wins again!  But the winner is Trump Entertainment Resorts, Inc. and not the presumptive Republican presidential nominee, Donald Trump.

On June 7, 2016, Judge Laurie Selber Silverstein of the Delaware Bankruptcy Court ruled on a motion to dismiss Diamondhead’s involuntary bankruptcy petition. The Creditors who filed the bankruptcy admitted to the Court that their intent in filing for bankruptcy was to remove management and to obtain a recovery for their equity investments. The “Opinion” is available here. This is the second recent opinion issued in this case.

In In re Intervention Energy Holdings, LLC, the question before the United States Bankruptcy Court for the District of Delaware was whether an investor who “bought and paid for [one] Common Unit (including all rights related thereto),”

Recently on June 6, 2016, the Delaware Bankruptcy Court considered a motion to dismiss the Intervention Energy Holdings, LLC, et al. bankruptcy proceeding. On May 20, 2016, Intervention Energy Holding, LLC (“IE Holdings”) and Intervention Energy, LLC (“IE”) filed a voluntary chapter 11 bankruptcy petition in the United States Bankruptcy Court for the District of Delaware (the “Voluntary Petition”).

I sense a sea change in the recent Delaware decision in Intervention Energy Holdings, LLC, 2016 WL 3185576 (6/3/16), refusing to enforce a bankruptcy proofing provision of a Delaware LLC’s operating agreement. Until recently, the trend had been to accept the fundamental principles of bankruptcy remoteness, although courts sometimes found ways to avoid honoring anti-bankruptcy devices in specific cases.