Over the summer, we wrote about why health care companies may want to consider buying assets out of bankruptcy, taking advantage of the Bankruptcy Code Section 363 sale process (a “363 Sale”). We are back with our second post, to provide more detail to the process and discuss some pros and cons of 363 Sales.

This past May, in a highly-anticipated decision, the Supreme Court held in Mission Product Holdings, Inc. v. Tempnology, LLC that a debtor’s rejection of an executory contract under Section 365 of the Bankruptcy Code has the same effect as a breach of contract outside of bankruptcy.

It is very common for bankruptcy court orders to provide that the court retains jurisdiction to enforce such orders. Similarly, chapter 11 confirmation orders routinely provide that the bankruptcy court retains jurisdiction over all orders previously entered in the case. The enforceability of these “retention of jurisdiction” provisions, however, will not rest on the plain language in the order but on the bankruptcy court’s statutory jurisdiction.

A recent bankruptcy court decision from the influential Southern District of New York permitted a debtor to reject executory contracts with midstream gathers as an exercise of sound business judgment. In In re Sabine Oil & Gas Corporation, the court issued an advisory ruling in which it determined that certain provisions of the rejected contracts were not covenants that ran with the land, and thus could be rejected thereby relieving the debtor of a financial hardship.

Pennsylvania’s legislature recently approved House Bill No. 1773, an overhaul to its Municipalities Financial Recovery Act, commonly known as “Act 47.”  HB 1773 was signed into law by Governor Tom Corbett on October 31, 2014.

The Ninth Circuit in In re Fitness Holdings Int’l, 2013 U.S. App. LEXIS 8729 (9th Cir. April 30, 2013) recently reversed precedent and established that bankruptcy courts in the Ninth Circuit have the power to determine whether a transaction creates a debt or equity interest for purposes of § 548 of the Bankruptcy Code. In doing so, the Ninth Circuit joins the Third, Fourth, Fifth, Sixth and Tenth Circuits in expressly recognizing bankruptcy courts’ ability to recharacterize claims in bankruptcy proceedings.

On April 17, 2012, the Northern Mariana Islands Retirement Fund (the “Fund”) became the first United States public pension fund to seek formal bankruptcy protection. The Fund, which provides retirement benefits to government employees of the Commonwealth of the Northern Mariana Islands (the “Commonwealth”) a U.S. territory, listed $256 million in assets and $1 billion in liabilities and has alleged it will exhaust its claims paying ability by as early as 2014. ”

The Bankruptcy Court held a status conference in the Harrisburg Chapter 9 earlier today.  The principal purpose of the hearing was for the court to set a schedule for objections to Harrisburg’s chapter 9 eligibility.  Objections to eligibility and supporting briefs are to be filed by October 28, a response by the City Council is to be filed by November 7, and replies on behalf of the objecting parties are to be filed by November 12.  The judge made it clear that the City Council has the burden of showing eligibility.  Th

The U.S. Court of Appeals for the Third Circuit recently confirmed that bankruptcy plans need not always recognize subordination agreements among creditors.

Over the last two years, much of the healthcare world has been watching the government’s prosecution of Insys Therapeutics for its sales and marketing practices related to its Subsys spray. Subsys is powerful and highly addictive fentanyl spray (administered under the tongue) that was approved by the FDA in 2012 for the treatment of persistent breakthrough pain in adult cancer patients who were already receiving, and tolerant to, regular opioid therapy.