In Official Comm. of Unsecured Creditors of Quantum Foods, LLC v. Tyson Foods, Inc. (In re Quantum Foods, LLC), 554 B.R. 729 (Bankr. D. Del. 2016), a Delaware bankruptcy court held in a matter of apparent first impression that a creditor’s allowed administrative expense claim may be set off against the creditor’s potential liability for a preferential transfer. The ruling is an important development for prepetition vendors that continue to provide goods or services to a bankruptcy trustee or chapter 11 debtor-in-possession.

In Redmond v. Jenkins (In re Alternate Fuels, Inc.), 789 F.3d 1139 (10th Cir. 2015), a panel of the U.S. Court of Appeals for the Tenth Circuit upheld bankruptcy courts’ authority to recharacterize insider debt as equity. In so ruling, the court rejected an argument that recent U.S. Supreme Court precedent prevents bankruptcy courts from using section 105(a) of the Bankruptcy Code to recharacterize debt as equity. Nevertheless, after upholding the recharacterization doctrine, the Tenth Circuit panel split on the doctrine’s application.

In Hafen v. Adams (In re Hafen), 616 B.R. 570 (B.A.P. 10^th Cir. 2020), a bankruptcy appellate panel from the Tenth Circuit ("BAP") held that the bankruptcy court is the only court with subject-matter jurisdiction to decide whether a claim or cause of action is property of a debtors' bankruptcy estate. As a consequence, the BAP held that the bankruptcy court abused its discretion by permitting a state court to determine whether creditors had "standing" to sue third-party recipients of allegedly fraudulent transfers.

Recently in Novinda,1 the Tenth Circuit Bankruptcy Appellate Panel2 upheld the separate classification of creditor claims in a chapter 11 plan on the basis that, among other things, such c

Overview

In Asarco, LLC v. Noranda Mining, Inc., the Tenth Circuit Court of Appeals held that representations made to the bankruptcy court that the Debtor’s settlement of environmental claims reflected only the Debtor’s share of the cleanup costs did not judicially estop the Debtor from brining a contribution claim against another potentially responsible party for those same costs.

When Can a Subsidiary Be Liable for the Actions of Its Owners?

In a typical application of the veil piercing remedy, an equity holder is held liable for the debts of the corporate entity it owns and controls. The tests courts use for determining when the remedy is available vary, but generally veil piercing may occur only where the equity holder has abused the corporate form, by using its control over an entity to commit a fraud or other injustice.

We recently blogged about Weinman v. Walker (In re Adam Aircraft Industries, Inc.), a decision from the U.S.

For those readers who have a sophisticated understanding of bankruptcy law, the holdings of Jester v. Wells Fargo Bank, N.A. (In re Jester) will not be surprising.

Payments made by a debtor within 90 days of a bankruptcy petition are generally avoidable as preferences under section 547 of the Bankruptcy Code.  Many exceptions and defenses exist, however, to ensure that creditors are not discouraged from conducting business with companies that may be at risk of filing