Introduction

On September 29, 2020, the United States House of Representatives Committee on the Judiciary advanced a Democrat-backed bill to the full chamber that seeks to address perceived shortcomings in the Bankruptcy Code’s protections for employee and retiree benefits and to curtail the use of bonuses and special compensation arrangements for executives in bankruptcy cases.

Our October 2010 DechertOnPoint “FDIC Begins Action on Its Super-Resolution Rules for Covered Financial Companies” discussed how systemi-cally significant non-bank financial companies (“covered financial compa-nies”) may find themselves in unknown territory if the FDIC is appointed re-ceiver for them.

Recently, in In re Tribune Company, the Third Circuit affirmed that the Bankruptcy Code means exactly what it says and that the enforcement of subordination agreements can be abridged when cramming down confirmation of a chapter 11 plan over a rejecting class entitled to the benefit of the subordination agreement, so long as doing so does not “unfairly discriminate” against the rejecting class (and the other requirements for a cramdown are satisfied).

Title II of the Dodd-Frank Act establishes a new non-judicial receivership al-ternative for resolving troubled financial companies that could threaten the stability of the U.S. financial system (“Covered Financial Companies”), as described further below. The Federal Deposit Insurance Corporation (“FDIC”), on October 12, 2010, issued a notice of proposed rulemaking (the “Proposal”) to begin to implement the provisions of Title II.

Analyzing the inner workings of the elements required for the securities contract “safe harbor” protection under Section 546(e) of the Bankruptcy Code, the Bankruptcy Court for the SDNY dismissed a complaint seeking to recover approximately US$1 billion in allegedly fraudulent transfers brought against various transferees as part of the Boston Generating Chapter 11 case.

The next few years will see the “redevelopment” of the law in two critical areas involving bank failures where the Federal Deposit Insurance Corpora-tion (“FDIC”) is appointed receiver: (i) the relative rights and claims of creditors of a bank or savings and loan holding company, including the FDIC; and (ii) D&O and professional liability. Significant decisions are be-ginning to be issued with regard to the former.

No, says the Delaware Bankruptcy Court in In re Maxus Energy Corp. In Maxus, the defendant, Vista Analytical Laboratory, Inc. (“Vista” or the “Defendant”), a designated critical vendor, sought summary judgement dismissing the preference complaint. The Court denied summary judgement finding that the critical vendor status did not per se insulate Vista from preference actions.

Background

The United States Court of Appeals for the Third Circuit on June 2, 2010, sitting en banc, overruled its own precedential holding in Avellino & Beines v. M. Frenville Co. (Frenville), 744 F.2d 332 (3d Cir. 1984), to hold that in the context of asbestos-related tort claims, a “claim” under the Bankruptcy Code arises when an individual is exposed pre-petition to a product giving rise to an injury rather than when the injury manifests itself. JED-WEN, Inc. v. Van Brunt (In re Grossman’s), No. 1563, slip op. at 18 (3d Cir. June 2, 2010).

It is well established that by filing a proof of claim in bankruptcy, a creditor submits itself to the equitable jurisdiction of the bankruptcy court and waives any right it would otherwise have to a jury trial with respect to any issue that “bears directly on the allowance of its claim.” Such a waiver normally applies in fraudulent transfer actions, since under Section 502(d) of the Bankruptcy Code the court must disallow a claim of any entity that received an avoidable transfer.