Richard J Cooper, Lisa M Schweitzer, Jessica Metzger and Richard C Minott, Cleary Gottlieb Steen & Hamilton

This is an extract from the 2022 edition of GRR's the Americas Restructuring Review. The whole publication is available here.

In summary

I recently had the pleasure of working with my colleagues Benny Roshan and Jillian Berk on an appeal before the Ninth Circuit Bankruptcy Appellate Panel (B.A.P), which tested the ever-evolving intersection between bankruptcy law and probate law.

In addition to the information and consultation obligations linked to their general responsibilities,¹Social and Economic Committees (“Comité Social et Economique” or "CSE") in French workplaces, which replace and merge all the employee representative bodies, staff representatives, works council, and health, safety and working conditions committee, must be informed and consulted in the event of a “restructuring and downsizing.”²What is their scope of intervention?

Cases Requiring Consultation

A few changes to the Federal Rules of Bankruptcy Procedure became effective on December 1, 2021. The most noteworthy change relates to Bankruptcy Rule 9036, which addresses notice and service by electronic transmission.

1. State of the Restructuring Market

1.1 Market Trends and Changes

State of the Restructuring and Insolvency Market

There were 27,359 insolvencies in France as of the end of September 2021, down 25.1% from the same period in 2020, and down 47.9% from September 2019. Such reduction is relatively stable across all sectors, including those most severely affected by the health-related restrictions, such as accommodation and food services (down 44.2% year-on-year) and trade (down 28.1% year on year).

Since the beginning of the COVID-19 pandemic and in 2020 alone, approximately 7,300 companies filed for Chapter 11 bankruptcy.[1] Of those, forty-two awarded pre-bankruptcy retention bonuses to 223 executives, totaling approximately $165 million.[2] These p

Fewer Insolvencies for More Opportunities

At the end of 2021, corporate bankruptcies (for most company sizes and in most sectors) were at their lowest level compared to the pre-COVID-19 figures from 2019, with a 50% drop in insolvency proceedings and a 10% decrease in pre-insolvency situations. This was largely due to the temporary impact of government emergency measures and support, including:

The U.S. Court of Appeals for the Fifth Circuit recently rejected a borrower’s objections to a bankruptcy court’s jurisdiction and held that the doctrine of res judicata barred the borrower’s claim objection as it was ultimately based on the alleged impropriety of the creditor’s claim from a prior bankruptcy.

A copy of the opinion in BVS Construction v. Prosperity Bank is available at: Link to Opinion.

“Messrs. Woods and Wu are fraudsters,” Judge Christopher S. Sontchi declared in the opening salvo of his scathing opinion. According to the former Chief Judge of the U.S. Bankruptcy Court for the District of Delaware, Woods and Wu fraudulently obtained a Paycheck Protection Program (“PPP”) loan on behalf of Urban Commons Queensway, LLC, which indirectly operates the Queen Mary, a cruise ship turned hotel docked near Long Beach, CA.

A district court judge recently reversed and remanded a well-known bankruptcy decision discharging a significant student loan debt.