In In re Energy Future Holdings Corp., 2019 WL 2535700 (3d Cir. June 19, 2019), a panel of the U.S. Court of Appeals for the Third Circuit ruled that adequate protection payments made during a bankruptcy case and distributions under a chapter 11 plan are not distributions of collateral for purposes of a "waterfall" provision in an intercreditor agreement.

Intercreditor and Subordination Agreements

Small Business Reorganization Act of 2019

The Bankruptcy Code creates a rebuttable presumption that a proof of claim is prima facie evidence of the claim's validity and amount. Courts disagree, however, over whether that presumption also applies in a proceeding to determine the secured amount of the creditor's claim. The U.S. Bankruptcy Court for the Eastern District of California weighed in on this issue in In re Bassett, 2019 WL 993302 (Bankr. E.D. Cal. Feb. 26, 2019).

“[A] party moving for substantive consolidation must provide notice of the motion to the creditors of a putative consolidated non-debtor,” held the U.S. Court of Appeals for the Ninth Circuit on Sept. 9, 2019. In re Mihranian, 2019 WL 4252115 (9th Cir. Sept. 9, 2019) (emphasis added).

On August 23, 2019, President Donald J.

The U.S. Court of Appeals for the Eleventh Circuit recently affirmed the bankruptcy court’s denial of a debtor-borrower’s motion for sanctions, which alleged that her mortgage loan servicer violated her bankruptcy discharge by mailing a communication in a purported attempt to collect upon a discharged debt.

Section 548 of the Bankruptcy Code enables trustees to avoid certain pre-bankruptcy transfers of “an interest of the debtor in property,” where the transfer was intended to defraud creditors or where the transfer was made while the debtor was insolvent and was not for reasonably equivalent value. 11 U.S.C. § 548(a). Section 544 of the Bankruptcy Code enables trustees to avoid a transfer of “property of the debtor” where a creditor of the debtor would have such a right under state law. 11 U.S.C. § 544(a).

The Bankruptcy Protector

A Texas bankruptcy judge has determined that a landlord will not be entitled to an administrative claim for post-petition rent as it failed to file and prosecute a timely motion for allowance of the administrative rent claim holding that a previously and timely filed proof of claim is insufficient. In re: Taco Bueno Restaurants Inc., --- B.R --- (Docket No. 18-33678), 2019 WL 4010681 (Bankr. N.D. Tex. Aug. 23, 2019).

The Filing and Lease Rejection

A debtor has the right to assume or reject any executory contract or unexpired lease through its bankruptcy, pursuant to the Bankruptcy Code.  A trademark license is an executory contract that is subject to assumption or rejection if performance remains due from both parties to the contract.

“… [P]ayments owed to a shareholder by a bankrupt debtor, which are not quite dividends but which certainly look a lot like dividends, should be treated like the equity interests of a shareholder and subordinated to claims by creditors of the debtor,” held the U.S. Court of Appeals for the Fifth Circuit on Sept. 3, 2019. In re Linn Energy, LLC, 2019 WL 4149481 (5th Cir. Sept. 3, 2019).