The Bottom Line

The Bottom Line

The Bottom Line

In a decision last month, DCF Capital, LLC v. US Shale Solutions, LLC (Sup. Ct. NY Co. Jan. 24, 2017), a New York State Supreme Court justice held that a noteholder that had properly accelerated indenture debt may sue to collect that debt notwithstanding the operation of a standard no-action clause. This holding, while appealing from a noteholder perspective, may not be compelled by Section 316(b) of the Trust Indenture Act on which it rests and is contrary to some prior case law.

Background

The Third Circuit recently affirmed that a debtor in Chapter 11 can use a tender offer to settle claims without running afoul of the Bankruptcy Code. Although In re Energy Future Holdings Corp.is limited to its particular facts and circumstances, the decision could lead to increased use of tender offers prior to confirmation of a bankruptcy plan.

The Bottom Line

The Bottom Line:

The Bottom Line:

The Bottom Line

The Third Circuit, in Artesanias Hacienda Real S.A. de C.V. v. N. Mill Capital, LLC (In re Wilton Armetale, Inc.), 968 F.3d 273 (3d Cir. 2020), issued a decision with potential implications for creditors who wish to pursue causes of action after a bankruptcy trustee refuses to act on such claims. The Third Circuit held that if a bankruptcy trustee clearly abandons a cause of action, the right of creditors to pursue that cause of action “spring[s] back to life.”

What Happened?

The recent decision of the Bankruptcy Court for the Southern District of New York in In re AAGS Holdings LLC, Case No. 19-13029 (SMB) (Bankr. D. Del. Nov. 12, 2019), underscores the ability of debtors — and specifically, for purposes of this Client Alert, parties to real property purchase contracts — to take advantage of the Bankruptcy Code’s 60-day tolling period to get more time to close on a purchase despite a “time of the essence” ("TOE") closing deadline.