Earlier this year, the United States Court of Appeals for the Eleventh Circuit decided in In re Lett that objections to a bankruptcy court’s approval of a cram-down chapter 11 plan on the basis of noncompliance with the “absolute priority rule” may be raised for the first time on appeal. The Eleventh Circuit ruled that “[a] bankruptcy court has an independent obligation to ensure that a proposed plan complies with [the] absolute priority rule before ‘cramming’ that plan down upon dissenting creditor classes,” whether or not stakeholders “formally” object on that basis.

When the United States Court of Appeals for the Third Circuit decided Thabault v. Chait, 541 F.3d 512 (3d Cir. 2008), in September 2008, it was the most significant accounting malpractice decision of last year and perhaps the most significant damages case in the last 20 years. Why? Accounting malpractice cases are filled with pitfalls for unsuspecting plaintiffs. Moreover, accounting firms tend to settle cases in which the plaintiffs survive motions predicated on tried-and-true legal defenses and factual hurdles. The result is that few auditing malpractice cases are tried.

The U.S. Supreme Court handed down its first bankruptcy decision of 2013 on May 13. In a unanimous ruling, the court held in Bullock v. BankChampaign N.A., 2013 BL 125909 (U.S. May 13, 2013), that the term “defalcation” for purposes of denying discharge of a debt under section 523(a)(4) of the Bankruptcy Code includes a “culpable state of mind” requirement involving knowledge of, or gross recklessness with respect to, the improper nature of a fiduciary’s behavior.

On Oct. 28, 2011, the United States Bankruptcy Court for the Eastern District of Virginia issued an opinion with significant ramifications for any holder of a patent license that operates internationally. At issue was an important protection afforded to patent licensees under the United States Bankruptcy Code - § 365(n).

On October 28, 2011, the United States Bankruptcy Court for the Eastern District of Virginia issued an opinion with significant ramifications for any holder of a patent license that operates internationally.  At issue was an important protection afforded to patent licensees under the United States Bankruptcy Code, § 365(n), which limits a debtor's right to reject intellectual property licenses in bankruptcy and generally provides that, in the event of a rejection, the licensee may elect either to treat the license as terminated or retain its rights for the duration of the license.

The United States District Court for the Central District of California has reversed a bankruptcy court ruling allowing two law firms—Snyder Miller & Orton LLP (SMO) and Morgan Lewis & Bockius LLP (MLB)—to serve as "special insurance counsel" to address insurance and insurance-coverage-litigation-related matters under the narrow special purpose standards of § 327(e). In re Thorpe Insulation Co., No. CV08-00246-DSF (C.D. Cal. Apr. 22, 2008). Citing In re Congoleum Corp., 426 F.3d 675 (3d Cir.

The United States District Court for the District of New Jersey has abstained from hearing a dispute between a primary and an excess professional liability insurer related to a bankruptcy settlement based on the mandatory abstention doctrine. Royal Indemn. Co. v. Admiral Ins. Co., Inc., 2007 WL 4171649 (D.N.J. Nov. 19, 2007). After the insured corporation declared bankruptcy, the bankruptcy trustee settled claims with the insured's primary professional liability insurer.

A federal district court in Illinois has held that a policyholder failed to provide sufficient notice of circumstances that could potentially give rise to a claim to trigger coverage under a D&O policy where the policyholder informed the insurers that it was "contemplating" filing for bankruptcy and expected claims to be filed against its directors and officers. Chatz v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 2007 WL 1119282 (N.D. Ill. Apr. 12, 2007).

TOWNSQUARE MEDIA v. BRILL (July 21, 2011)

UNITED STATES OF AMERICA v. ROGAN (May 12, 2011)