In a highly anticipated decision, the U.S. Court of Appeals for the Fifth Circuit recently affirmed a bankruptcy court order dismissing a chapter 11 case filed by a corporation without obtaining—as required by its corporate charter—the consent of a preferred shareholder that was also controlled by a creditor of the corporation. In Franchise Services of North America, Inc. v. Macquarie Capital (USA), Inc. (In re Franchise Services of North America, Inc.), 891 F.3d 198 (5th Cir.

In the July/August 2010 edition of the Business Restructuring Review, we reported on an important ruling handed down by bankruptcy judge James M. Peck in the Lehman Brothers chapter 11 cases addressing the interaction between the Bankruptcy Code’s general setoff rules (set forth in section 553) and the Code’s safe harbors for financial contracts (found principally in sections 555, 556, and 559 through 562). In In re Lehman Bros. Holdings, Inc., 433 B.R. 101 (Bankr. S.D.N.Y.

In a recent decision, Judge Mary F. Walrath of the United States Bankruptcy Court for the District of Delaware greatly limited debtors’ ability to release parties under a chapter 11 plan in the bankruptcy cases of Washington Mutual, Inc. (“WMI”), and its debtor affiliates (together with WMI, the “Debtors”). In In re Washington Mutual, Inc., Judge Walrath approved a global settlement agreement (the “Global Settlement”) reached by the Federal Deposit Insurance Corporation (“FDIC”) as receiver for Washington Mutual Bank (“WaMu Bank”); JPMorgan Chase Bank, N.A.

Rehabilitating a debtor’s business and maximizing the value of its estate for the benefit of its various stakeholders through the confirmation of a chapter 11 plan is the ultimate goal in most chapter 11 cases. Achievement of that goal, however, typically requires resolution of disagreements among various parties in interest regarding the composition of the chapter 11 plan and the form and manner of the distributions to be provided thereunder.

When a company that has been designated a responsible party for environmental cleanup costs files for bankruptcy protection, the ramifications of the filing are not limited to a determination of whether the remediation costs are dischargeable claims. Another important issue is the circumstances under which contribution claims asserted by parties coliable with the debtor will be allowed or disallowed in the bankruptcy case. This question was the subject of rulings handed down early in 2011 by the New York bankruptcy court presiding over the chapter 11 cases of Lyondell Chemical Co.

A decision recently handed down by the Delaware Chancery Court, CML V, LLC v. Bax, indicates that creditors of a limited liability company (“LLC”) organized under Delaware law do not have standing to institute derivative suits against an LLC’s management, even when the LLC is insolvent, unless the right is expressly set forth in the LLC’s organizational documents or external agreements.

Background

Administrations, including "pre-packs", are not capable of constituting "insolvency proceedings...instituted with a view to the liquidation of the assets of the transferor" within the meaning of Regulation 8(7) of TUPE. Where there is a sale of an undertaking by an administrator, the employees assigned to the undertaking will automatically transfer to the buyer and receive unfair dismissal protection.

Key facts

The U.S. Supreme Court’s October 2010 Term (which extends from October 2010 to October 2011, although the Court hears argument only until June or July) officially got underway on October 4, three days after Elena Kagan was formally sworn in as the Court’s 112th Justice and one of three female Justices sitting on the Court.

When an airline goes bankrupt, do the owner participants in aircraft leverage-lease transactions have a right to recover on monetary claims (worth billions) based on tax indemnification agreements ("TIAs")? The answer lies in the meaning of the words "pay/paid/pays," which had been the subject of conflicting interpretations in the bankruptcy and district courts in the Northwest Airlines and Delta Air Lines bankruptcy cases.

U.S. federal courts have frequently been referred to as the “guardians of the Constitution.” Under Article III of the Constitution, federal judges are appointed for life by the U.S. president with the approval of the Senate. They can be removed from office only through impeachment and conviction by Congress. The first bill considered by the U.S. Senate—the Judiciary Act of 1789—divided the U.S. into what eventually became 12 judicial “circuits.” In addition, the court system is divided geographically into 94 “districts” throughout the U.S.