A credit-bidding lender (“Lender”) acquired a debtor’s assets “in ‘good faith’ and ‘without collusion,’ the purchase price ‘was not controlled by any agreement among potential bidders,’ and [Lender] had not ‘engaged in any conduct that would cause or permit the Purchase Agreement to be avoided or costs and damages to be imposed under section 363(n) of the Bankruptcy Code,’” held the U.S. Bankruptcy Court for the Southern District of New York on Sept. 10, 2019. In re Waypoint Leasing Holdings, Ltd., 2019 WL 4273889, *11 (Bankr. S.D.N.Y. Sept. 10, 2019).

In recent years, it has become common practice in large chapter 11 cases for debtors to include language in their proposed chapter 11 plan which purports to release certain nondebtors from the claims of third parties. Although some third parties may consent to the release—such as by voting in favor of the plan or otherwise electing to do so during the plan solicitation process—circumstances frequently arise in which the debtors seek approval from the bankruptcy court to release nondebtors from third parties’ claims without the consent of the third parties.

On Friday, August 23, 2019, the President signed into law the first major amendments to the United States Bankruptcy Code since 2005. These promise to change the legal landscape for creditors.

We have written before about the virtual dead end faced by marijuana companies who try to seek protection in the bankruptcy courts. Almost uniformly, bankruptcy courts have shut their doors on marijuana companies, including their landlords and suppliers.

There is currently a split in authority on the issue of whether a trustee may recover from an immediate or mediate transferee if the recipient received proceeds from a fraudulent transfer but not the fraudulently transferred property itself.

Running a family-owned farm is not easy work under the best of economic circumstances, and it can be nearly impossible when times are tough. More than 30 years ago, during the mid-1980s, John Cougar Mellencamp’s mournful song “Rain on the Scarecrow” discussed the epidemic of family farm foreclosures hitting the American Heartland. Thankfully, the overall family farm economy is not at that crisis level today, but storm clouds are rumbling.

Consider these facts. A debtor in bankruptcy sued two parties for breach of contract. The debtor assigned its rights and interests in the cause of action to another entity. The defendants moved to dismiss the lawsuit, arguing that the court now lacked jurisdiction over the case. They asserted that the debtor’s assignment of the cause of action destroyed the bankruptcy court’s “related to” jurisdiction. Who wins?

On August 9, 2019, in a unanimous decision (written by a former bankruptcy judge), the Eighth Circuit Court of Appeals affirmed the confirmation of the Peabody Energy Chapter 11 plan (“Plan”)¹ with a prominent backstopped rights offering component.

In In re Linn Energy, LLC, 2019 WL 4149481 (5th Cir. Sept. 3, 2019), the Fifth Circuit recently reminded us that if a debt instrument looks like a security and quacks like a security, it likely is a security for purposes of subordination under section 510(b) of the Bankruptcy Code. The implications of characterizing an instrument as a security under section 510(b) is that any claim arising therefrom is subject to subordination to general unsecured creditors.

On August 23, 2019, President Donald J. Trump signed into law two bills amending the Bankruptcy Code: (i) the Family Farmer Relief Act of 2019 (“FFRA”); and (ii) the Small Business Reorganization Act of 2019 (“SBRA,” and with FFRA, the “Acts”).¹ Here are summaries of the Acts and important takeaways.

DEBT LIMIT INCREASE APPLICABLE TO AGRIBUSINESSES