In In re Energy Future Holdings Corp., 2019 WL 2535700 (3d Cir. June 19, 2019), a panel of the U.S. Court of Appeals for the Third Circuit ruled that adequate protection payments made during a bankruptcy case and distributions under a chapter 11 plan are not distributions of collateral for purposes of a "waterfall" provision in an intercreditor agreement.

Intercreditor and Subordination Agreements

Small Business Reorganization Act of 2019

The Bankruptcy Code creates a rebuttable presumption that a proof of claim is prima facie evidence of the claim's validity and amount. Courts disagree, however, over whether that presumption also applies in a proceeding to determine the secured amount of the creditor's claim. The U.S. Bankruptcy Court for the Eastern District of California weighed in on this issue in In re Bassett, 2019 WL 993302 (Bankr. E.D. Cal. Feb. 26, 2019).

The scope of discovery available in a bankruptcy case concerning a debtor's conduct, property, financial condition, and related matters is so broad that it has sometimes been likened to a permissible "fishing expedition." However, a ruling recently handed down by the U.S. Bankruptcy Court for the Southern District of New York demonstrates that there are limits to the information that can be discovered in bankruptcy. In In re Cambridge Analytica LLC, 600 B.R. 750 (Bankr. S.D.N.Y.

After discussions among judges from several jurisdictions, including Argentina, Australia, Bermuda, the British Virgin Islands, Canada, the Cayman Islands, England and Wales, Singapore, and the United States, at the initial meeting of the Judicial Insolvency Network (the "JIN") in October 2016, the JIN developed Guidelines for Communication and Cooperation Between Courts in Cross-Border Insolvency Matters (the "Guidelines").

In Trinity 83 Dev., LLC v. ColFin Midwest Funding, LLC, 917 F.3d 599 (7th Cir. 2019), the U.S. Court of Appeals for the Seventh Circuit held that section 363(m) of the Bankruptcy Code does not moot an appeal involving a dispute over the proceeds of a sale of assets in bankruptcy. In concluding that section 363(m) does not moot such an appeal, but merely provides the purchaser with a defense in litigation challenging the sale, the Seventh Circuit overruled its prior decision on the scope of section 363(m) in In re River West Plaza-Chicago, LLC, 664 F.3d 668 (7th Cir.

In Mission Product Holdings, Inc. v. Tempnology, LLC, 139 S. Ct. 652, 2019 WL 2166392 (U.S. May 20, 2019), the U.S. Supreme Court ruled that the rejection in bankruptcy of a trademark license agreement, which constitutes a breach of the agreement under section 365(g) of the Bankruptcy Code, does not terminate the rights of the licensee that would survive the licensor’s breach under applicable non-bankruptcy law.

On June 3, 2019, the U.S. Supreme Court ruled in Taggart v. Lorenzen, 139 S. Ct. 1795 (2019), that a bankruptcy court may hold a creditor in civil contempt for attempting to collect on a debt that has been discharged in bankruptcy "if there is no fair ground of doubt as to whether the [discharge] order barred the creditor’s conduct." In so ruling, the Court vacated and remanded a ruling by the U.S.

The recent chapter 11 filings by PG&E Corp. and its Pacific Gas & Electric Co. utility subsidiary (collectively, "PG&E") and FirstEnergy Solutions Corp. have reignited the debate over the power of a U.S. bankruptcy court to authorize the rejection of contracts regulated by the Federal Energy Regulatory Commission ("FERC"). Only a handful of courts have addressed this thorny issue to date, and with conflicting results in a controversy that may ultimately need to be resolved by the U.S. Supreme Court or legislative action.

In In re Ultra Petroleum Corp., 913 F.3d 533 (5th Cir. 2019), the U.S. Court of Appeals for the Fifth Circuit ruled that a "make-whole," or "prepayment," premium owed on unsecured notes issued by a chapter 11 debtor constituted unmatured interest disallowed by section 502(b)(2) of the Bankruptcy Code. The ruling represents a landmark decision on the allowance of such premiums in chapter 11, over which there has been considerable litigation in recent years, including at the circuit court level.

Enforceability of Make-Whole Premiums in Bankruptcy