(Bankr. E.D. Ky. Aug. 28, 2017)

The bankruptcy court denies confirmation of the debtors’ proposed Chapter 12 plan. The court first determines that the debtors’ timber operations constitute a “farming operation” under § 101(21). Those operations are ongoing rather than a single cut of all timber at one time. The debtors are eligible to proceed under Chapter 12. However, the debtors failed to provide sufficient evidence that the proposed plan was feasible. Opinion below.

Judge: Wise

Attorney for Debtors: Michael L. Baker

The long-running litigation spawned by the leveraged buyout of Tribune Company, which closed in December 2007, and the subsequent bankruptcy case commenced on December 8, 2008[1] has challenged the maxim that “there’s nothing new under the sun” even for this writer with four decades of bankruptcy practice behind him.

Two sections of the Bankruptcy Code addressing leases sometimes work in tandem with each other, but some courts are creating a conflict.

Section 363 gives bankruptcy courts the power to approve the sale of the assets of a bankruptcy debtor, free and clear of any liens, claims or interests in the property, under certain conditions.

Section 365 gives bankruptcy courts the power to approve the termination of unexpired leases of real estate or to approve their assumption and assignment, also under certain conditions.

The Bottom Line

The U.S. Court of Appeal for the Eighth Circuit recently affirmed a bankruptcy court’s rejection of a proof of claim filed by a creditor where the claim was based upon a debt which was time barred by the creditor’s failure to comply with the applicable state law deadline for pursuing a deficiency judgment following a non-judicial foreclosure. 

A copy of the opinion is available at: Link to Opinion.

In Short

The Situation: In cross-border restructuring cases, court-approved insolvency protocols are applied to facilitate communication between U.S. and foreign courts and standardize certain common procedures. The protocols are sometimes adapted to address case-specific issues.

The Result: Case-specific provisions tend to address information-sharing guidelines, claims reconciliation, the management of assets, and dispute resolution.

Two years have passed since the United States Supreme Court passed down a 5-4 decision in Obergefell v. Hodges which held that same-sex couples have a fundamental right to marry under both the Due Process and Equal Protection Clauses of the Fourteenth Amendment.

What Happened: The Third Circuit Court of Appeals joined five other circuits in holding that the unforeseen business circumstances exception excused WARN notice where an event outside the employer's control that would trigger layoffs was possible but not probable to occur.

The Larger Landscape: While the Fifth, Sixth, Seventh, Eighth, and Tenth Circuits have also adopted a probability standard for determining when the unforeseen business circumstances exception applies, the other circuits have not yet ruled on the issue.

This article provides a brief overview of the somewhat related doctrines of setoff and recoupment in the Chapter 11 context. Setoff is recognized in the Bankruptcy Code to offset the claims of creditors and the debtor in a bankruptcy proceeding. Recoupment is a common law doctrine of similar effect. Sometimes overlooked by debtors and creditors alike, these doctrines can be of critical consequence in the settling of accounts between a creditor and the bankrupt debtor.

Setoff

(6th Cir. Aug. 31, 2017)