1 The Third Circuit also affirmed a judgment that awarded the senior creditor damages for the misapplication of such collateral proceeds in violation of the intercreditor agreement’s turnover provision.
Whether a contract is "executory" such that it can be assumed, rejected, or assigned in bankruptcy is a question infrequently addressed by the circuit courts of appeals. The U.S. Court of Appeals for the Third Circuit provided some rare appellate court-level guidance on the question in Spyglass Media Group, LLC v. Bruce Cohen Productions (In re Weinstein Company Holdings LLC), 997 F.3d 497 (3d Cir. 2021).
At a conference to be held at the end of the summer recess on September 27, 2021, the U.S. Supreme Court will consider whether to grant petitions seeking review during the new Term that begins on October 4 of three notable appeals involving issues of bankruptcy law. Two of those appeals address the doctrine of "equitable mootness." The third concerns federal preemption of a non-debtor third party's tortious interference claims against other non-debtor third parties.
The author examines a recent decision by the U.S. Court of Appeals for the Third Circuit that involved whether a contract was, or was not, an executory contract.
“[B]ankruptcy inevitably creates harsh results for some players,” explained the U.S. Court of Appeals for the Third Circuit on May 21, 2021, when it denied a film producer’s claim for contractual cure payments in In re Weinstein Company Holdings, LLC. 1
A recent case before bankruptcy judge Karen B. Owens of the United States Bankruptcy Court for the District of Delaware, In re Dura Auto. Sys., LLC, No. 19-12378 (KBO), 2021 WL 2456944 (Bankr. D. Del. June 16, 2021), provides a cautionary reminder that the Third Circuit does not recognize the doctrine of implied assumption (i.e., assumptions implied through a course of conduct as opposed to those that are assumed pursuant to a motion and court order).
Breaking with the Third Circuit and the Fifth Circuit, on June 28, 2011, the Seventh Circuit held that a debtor's plan of reorganization that provides for the sale of the debtor's assets free and clear of an existing security interest may only be confirmed over the objection of its secured creditor if the plan's sale procedure permits the secured creditor to credit bid its secured debt for the assets being sold. River Road Hotel Partners, LLC v. Amalgamated Bank, -- F.3d --, Nos. 10-3597 & 10-3598 (7th Cir. June 28, 2011).
Timeliness:
Ohio Farmers Insurance Co. v. City of Akron, Case Nos. 25642, 25725 (Ohio Ct. App. July 20, 2011) (affirming confirmation of award; panel properly found “good cause” for delay in seeking confirmation; rule providing one year to seek confirmation deemed not a statute of limitations).
Partiality:
Summary
In a 24 page decision signed July 8, 2011, Judge Walrath of the Delaware Bankruptcy Court granted a motion to for summary judgment, holding a non-debtor defendant liable with the Debtor as a single employer for alleged WARN Act violations. Judge Walrath’s opinion is available here (the “Opinion”).
Background
The United States Court of Appeals for the Third Circuit wasted no time getting the new year off to a roaring start through its ruling in In re LTL Mgmt., LLC, Case No. 22-2003, 2023 WL 1098189 (3d Cir. Jan. 30, 2023). In LTL, the Third Circuit affirmatively dismissed the so-called “Texas Two-Step” by which a solvent corporation had tried to cabin potentially billions of dollars of mass tort liability through an internal corporate restructuring.
In that ruling, the Third Circuit determined that:
“The theme is clear: absent financial distress, there is no reason for Chapter 11 and no valid bankruptcy purpose.”