In the fourth quarter of 2008, global credit markets were virtually frozen, leading many distressed businesses and their constituents to take measures to avoid bankruptcy filings at almost all costs. Without access to debtor-in-possession (DIP) financing, bankruptcy most often results in liquidation – and with lenders reluctant to provide new money, even in exchange for superpriority and/or priming liens, total collapse became an increasingly common result.

As we previewed last week, the U.S. Bankruptcy Court for the Southern District of New York recently handed General Motors (“New GM”) an enormous victory that may end up shielding the company from up to $10 billion in successor liability claims.

Since the Supreme Court’s decision in Stern v.

After more than two years of study on what needs fixing, the ABI Reform Commission proposed hundreds of discrete recommendations on refurbishing the Bankruptcy Code. The 396 page report addresses a wide variety of topics, from modifying the rights of secured lenders in large corporate workouts to creating a viable restructuring path for small businesses.

Introduction

Directors and Officers (“D&O”) liability policies, like many other liability policies, often have an exclusion that precludes coverage when one insured sues another insured. Coverage, however, can be restored under certain exceptions. One of those exceptions is the bankruptcy exception, which allows a bankruptcy trustee or comparable authority to sue on behalf of the estate against another insured like a director or officer.

In a recent decision, the Chief Judge of the District Court for the Southern District of New York reversed a decision of the bankruptcy court in the Sears bankruptcy case that was prejudicial to the interests of shopping center landlords whose tenants become chapter 11 debtors.

On May 17, 2019, the Bankruptcy Court for the Southern District of New York announced that the Official Committee of Consumer Creditors (the “Consumer Committee”) appointed in the In re Ditech Holding Corp. bankruptcy case would not be disbanded. Ditech, supported by the ad hoc group of term loan lenders (the “Ad Hoc Group”), had filed a motion requesting that the Consumer Committee be disbanded or alternatively have a limited scope and budget. After receiving objections from the U.S.

How real is the threat to the District of Delaware and the Southern District of New York as the prime venue choices for corporate Chapter 11 bankruptcy cases? It appears that both are safe, at least for now.

What can a lender do about successive bankruptcy filings by a borrower? What can lessors do when their tenants file successive bankruptcy petitions? A recent decision by a bankruptcy court in the Eastern District of New York gives guidance on these questions.