In the wake of the COVID-19 pandemic, we often are asked what our clients should do if a business counterparty (such as a vendor, customer or other contract counterparty) is suffering distress and may be contemplating filing for bankruptcy. It is, of course, impossible to anticipate every potential scenario, but here are several general “do’s and don’ts” to consider.
On August 26, 2019, President Trump signed the Small Business Reorganization Act (“SBRA”) into law. The SBRA is scheduled to take effect on February 22, 2020.
A precedential decision issued on November 28, 2018 by the U.S. Court of Appeals for the
Third Circuit highlights the limits of bankruptcy judges’ authority to transfer non-core proceedings to other courts. The Third Circuit’s opinion in In re IMMC Corp. f/k/a Immunicon Corp., et al., Case No. 18-1177, also emphasizes the importance of choosing the right forum for filing post-confirmation litigation.
When creditors are left holding the bag after providing valuable goods or services to a company that files for bankruptcy relief, they often feel misused and that an injustice has occurred. After all, they are legitimately owed money for their work or their product, and the debtor has in effect been unjustly enriched because it received something for nothing. Unsecured creditors do not have recourse to collateral, and typically have to wait in line to receive cents on the dollar.
In its fifth trip to the Seventh Circuit Court of Appeals, the Sentinel Management Group’s bankruptcy case recently explored complex issues bankruptcy practitioners often encounter in large chapter 11 cases with financial services debtors.
We have written in the past about the doctrine of equitable mootness. A March 30, 2017 per curiam affirmance by the Eleventh Circuit Court of Appeals in Beem v. Ferguson (In re Ferguson) explores the concept and limitations of equitable mootness and distinguishes it from the related doctrine of constitutional mootness.
Judge Carey in the District of Delaware recently ruled on an intriguing question—can a defendant in a preference action reduce the amount of a recoverable preference by setting off the value of an allowed administrative expense claim?. Though not late-breaking news, this case provides a thorough examination of the essential character of administrative expense claims.
The Jevic Holding Corp. bankruptcy case is proving to be precedent setting. In a prior post, we examined how the court had greatly increased the evidentiary burden on a party seeking to hold one company liable for the debts of another company under a “single employer” theory. That ruling was seen as a boon for private equity firms who were oftentimes the target of Chapter 11 creditor
Two controversial mechanisms are available in many circuits to assist parties in a chapter 11 case to reach a global resolution and obtain plan confirmation: non-consensual third-party releases and preliminary stays against third-party litigation.
Virtually every business—regardless of its size, nature (manufacturing, service, professional, tech) or particular industry—is currently suffering significant distress as a result of the unprecedented shutdown of huge portions of the U.S. (and global) economy. It is therefore clear that the number of businesses (and individuals) who will seek bankruptcy protection in the coming months will be enormous.