Is an insolvent debtor’s pre-bankruptcy termination of a commercial lease a fraudulent transfer? The Third Circuit said no when it held that a lessor’s pre-bankruptcy termination of the debtors’ lease and purchase option “was not a transfer under Bankruptcy Code §548(a) (1)(B).” In re Pazzo Pazzo Inc., 2022 WL 17690158 (3d Cir. Dec. 15, 2022). But the Seventh Circuit held that a chapter 11 debtor’s pre-bankruptcy “surrender of [two] … leases to [its landlord] could be regarded as a preferential [or fraudulent] transfer.” In re Great Lakes Quick Lube L.P., 816 F.3d 482 (7th Cir. 2016).

Sometimes a debtor is liable for fraud that she did not personally commit,” held the U.S. Supreme Court on Feb. 22, 2023, when the debtor’s business partner had deceptively obtained money by fraud, thereby making the innocent partner liable for a nondischargeable debt under Bankruptcy Code (Code) §523(a)(2)(A) (“any debt from money “obtained by … fraud” not dischargeable and survives debtor’s bankruptcy). Bartenwerfer v. Buckley, 2023 WL 2144417 (Feb. 22, 2023).

Four years after New York grocery chain Tops’ exit from Chapter 11, U.S. Bankruptcy Judge Robert Drain ruled that the Tops’ Chapter 11 trustee may proceed with litigation against certain private equity investors. The trustee alleged that the investors drove the company into bankruptcy by paying themselves more than $375 million in dividends while neglecting to address Tops’ unfunded pension liabilities.

"When a modification to a Chapter 11 reorganization plan materially and adversely affects the treatment of a class of claim or interest holders, those claim or interest holders are entitled to a new disclosure statement and another opportunity to vote.” In re America-CV Station Group, Inc., 2023 WL 109967 (11th Cir. Jan. 5, 2023). In this case, the U.S. Court of Appeals for the Eleventh Circuit just upended a hastily confirmed reorganization plan.

“The theme is clear: absent financial distress, there is no reason for Chapter 11 and no valid bankruptcy purpose.”

Should a bankruptcy court’s preliminary injunction be subject to appellate review?Taking the negative position, the U.S. District Court for the Eastern District of New York recently held that it had the “discretion … to decline to hear” an appeal from a bankruptcy court’s preliminary injunction. Navient Solutions, LLC et al. v. Homaidan et al., 2022 WL 17252459, *4 (E.D.N.Y. Nov. 28, 2022), quoting In re Kassover, 343 F.3d 91, 95 (2d Cir.

Judge Martin Glenn of the United States Bankruptcy Court for the Southern District of New York issued a ruling last week in the Celsius Network bankruptcy case addressing whether customer deposits on a cryptocurrency exchange or platform are property of the debtor or property of the customer. The answer, not surprisingly, depends on the Terms of Use governing the account in question. In this case, the Court found that the terms clearly and unambiguously provided that ownership of cryptocurrency assets deposited into “Earn Accounts” resides with Celsius.

Funds' assets in the U.S. has been denied by the United States Bankruptcy Court for the Southern District of New York. See 2007 Bankr. LEXIS 2949, *26 (Bankr. S.D.N.Y. Aug. 30 , 2007). The Funds were being liquidated in the Cayman Islands, but the bankruptcy court held that they were not eligible for Chapter 15 relief under the U.S. Bankruptcy Code (the "Code") because the liquidations were not pending in a country where the Funds had their "center of main interests" or an "establishment" for the conduct of business.

The unique circumstances of the last few years (and hard-charging investors) have forced many borrowers without adequate near-term liquidity to engage in more creative and aggressive liability-management transactions. These transactions have often taken the form of "uptiering" financings.

The Southern District of New York vacated a bankruptcy court’s judgment holding a debtor’s business competitor (C) “in contempt for violation of the [Bankruptcy Code’s] automatic stay…and assessing sanctions” of $19.2 million. In re Windstream Holdings, Inc., 2022 WL 5245633, *1 (2) (S.D.N.Y. Oct 6, 2022).