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In CMH Liquidating Trust v. National Union Fire Insurance Company of Pittsburgh, PA, Case No. 16-cv-14434 (E.D. Mich. 2019) (“CMH”), the District Court for the Eastern District of Michigan held that an insurance policy that was renewed post-petition was still an executory contract, and thus, a provision denying coverage for acts leading to bankruptcy was a prohibited ipso facto clause.

What Happened?

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The Fifth Circuit recently held in RPD Holdings, L.L.C. v. Tech Pharmacy Services (In re Provider Meds, L.L.C.), No. 17-1113 (5th Cir. Oct. 29, 2018), that a patent license that was not specifically listed on the debtors’ bankruptcy schedules was automatically deemed rejected where it was not assumed within 60 days of the cases’ conversion from Chapter 11 to Chapter 7.

What Happened?

The bankruptcy of Energy Future Holdings has spawned numerous decisions in the various segments of its Chapter 11 case. Yet another such decision was handed down by the U.S. District Court for the District of Delaware in March of this year, in which the court addressed the question of what constitutes collateral, and proceeds of collateral, in a complex Chapter 11 reorganization.

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On October 20, 2017, the U.S. Court of Appeals for the Second Circuit issued a long-awaited decision in In re MPM Silicones, LLC (“Momentive”) holding that, with one important exception, that the plan of reorganization confirmed by the bankruptcy court comports with Chapter 11. Case No. 15-1682 (2d Cir. Oct. 20, 2017).

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The Bottom Line

Section 316(b) of the Trust Indenture Act, which prohibits action that would deprive individual bondholders of the right to receive principal and interest, has taken center stage of late with rulings on the scope of its applicability. But another provision of Section 316 of the TIA drives in the opposite direction, and is equally fundamental to the architecture of indenture debt as commonly issued in this country. Section 316(a)(1) prescribes the default rule that a majority of bondholders have the power to direct the remedial actions of the trustee.

On May 4, 2015, the Delaware Court of Chancery issued an important decision regarding creditor standing to  maintain a derivative action on behalf of an insolvent corporation. In Quadrant Structured Products Company v. Vertin et al., C.A. No.

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