A foreign company makes a foreign distribution to foreign shareholders shortly before merging with a U.S. company in a highly-leveraged LBO.  The resulting company files a chapter 11 petition in the United States Bankruptcy Court for the Southern District of New York 13 months later.  Can the foreign transfer be avoided as a fraudulent conveyance under section 548 of the Bankruptcy Code?  Previously, the answer was almost certainly not (at least in the Southern District of New York).

Immediately upon the commencement of a bankruptcy case an automatic stay prohibits actions against the debtor to, among other things, collect pre-petition obligations and to obtain control over property of the bankruptcy estate.  The automatic stay furthers fundamental policy goals of  providing a debtor with the “breathing space” to reorganize or otherwise address its problems, and providing an orderly process for dealing with creditor claims.  A violation of the stay can be costly, resulting in an award of actual and possibly punitive damages.  Two recent rulings of th

Baker Botts L.L.P. has filed its application for retention as debtors’ counsel in In re New Gulf Resources, LLC, et al. (Case No. 15-12556, Bankr. D. Del.), and the application incudes a novel “Fee Premium.” Essentially, Baker Botts’ aggregate fees incurred in the case will be increased by 10% (subject to court approval) but … Baker Botts will waive the entire Fee Premium “if, and only if, Baker Botts does not incur material fees and expenses defending against any objection with respect to an interim or final fee application.”  

Precipitous commodity price declines that began in mid-2014 continued to disrupt the oil and gas industry in 2015, outlasting the expectations of many analysts. By the end of 2015, prices for both Brent and WTI crude were fluctuating in the mid to upper $30s per barrel, down from highs of over $100 a barrel in mid-2014.

Two recent court decisions may result in a broadening of the range of options available to an equity sponsor in respect of an insolvent portfolio company. The first decision may provide increased flexibility in structuring asset sales in certain chapter 11 settings, by utilizing escrows and other techniques to potentially avoid the need to apply asset-sale proceeds strictly in accordance with creditor priorities under the U.S. Bankruptcy Code.

The U.S. Bankruptcy Court for the Middle District of Florida recently overruled a debtor's objection to a mortgagee's secured claim and denied the debtor's motion to determine secured status, holding that the issues should have been brought by adversary proceeding, and in any event neither Florida's statute of limitations nor its statute of repose barred enforcement of the note and mortgage.  A copy of the opinion is attached.

When can a bank be at risk of unknowingly receiving a fraudulent transfer?  How much information does a bank need to have before it is on “inquiry notice”?  A recent decision from the Seventh Circuit Court of Appeals highlights the risks that a bank takes when it ignores red flags and fails to investigate.

In re Sentinel Management Group – The Decision

It’s a new year, and we have a new law affecting debtors and creditors in California.  Effective January 1, 2016, California’s Uniform Voidable Transactions Act (UVTA) has replaced California’s Uniform Fraudulent Transfer Act (UFTA). The full text of the new UVTA can be found here.  While the UVTA is similar to the UFTA in most respects, certain important changes and key aspects of the new law are discussed below.

Section 105(a) of the Bankruptcy Code provides that a bankruptcy court “may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.” 11 U.S.C. § 105(a).  In the Caesars bankruptcy, the Seventh Circuit explored the breadth of a court’s rights to take action under this section.  The Seventh Circuit held that section 105(a) permits the Bankruptcy Court to issue an injunction with respect to litigation pending against the debtors’ non-debtor parent.

The Bankruptcy Blog previously published an extensive guide to evaluating and purchasing director and officer (”D&O”) liability insurance for individuals at the helm of troubled companies.  But what happens when a policy is in place and the directors and officers seek to obtain the proceeds of that policy to cover defense costs or related expenses?