Sales of assets pursuant to Section 363 of the Bankruptcy Code or pursuant to a plan of reorganization provide a number of benefits to a purchaser, but they also present a number of potential impediments, particularly to purchasers who are not familiar with the bankruptcy sale process.

On September 26, 2014, the United Nations Human Rights Council passed a resolution (A/HRC/27/L.26) condemning "vulture funds" like Argentina's holdout bondholders "for the direct negative effect that the debt repayment to those funds, under predatory conditions, has on the capacity of Governments to fulfill their human rights obligations, particularly economic, social and cultural rights and the right to development." Among other things, the resolution expresses concern regarding "the voluntary nature of international debt relief schemes which has created opportunities

Reduced Liquidity—How Will Oil Companies Feel the Pinch?

An article appearing in the July/August 2014 issue of the Business Restructuring Review discusses a ruling by an Oregon bankruptcy court that held unenforceable a negative covenant in a limited liability company's operating agreement prohibiting the company from filing a bankruptcy petition, among other actions.

NOTABLE BUSINESS BANKRUPTCY DECISIONS OF 2014

ALLOWANCE/DISALLOWANCE/PRIORITY/DISCHARGE OF CLAIMS

The Bankruptcy Code provides certain protections to buyers of bankruptcy estate assets and to entities that extend credit or financing to a trustee or chapter 11 debtor-in-possession ("DIP"). However, these safe harbors are available only if a buyer or lender is deemed to have acted in "good faith," a concept that is not defined in the Bankruptcy Code.

In its first bankruptcy decision of 2014 (October Term, 2013), the U.S. Supreme Court held on March 4, 2014, in Law v. Siegel, 134 S. Ct. 1188 (2014), that a bankruptcy court cannot impose a surcharge on exempt property due to a chapter 7 debtor’s misconduct. In reversing a ruling by the Ninth Circuit, Law v. Siegel (In re Law), 2011 BL 148411 (9th Cir. June 6, 2011), cert. granted, 133 S. Ct.

On November 7, 2014, Judge Steven Rhodes, the judge presiding over the City of Detroit's bankruptcy case, announced that he would confirm the City's proposed Plan of Adjustment (the "Plan"), including the creditor settlements contained within that Plan. A more detailed written opinion will follow, but the opinion read from the bench on November 7, together with an earlier opinion in this case, are among the most important precedents in U.S. municipal bankruptcy law.

The government's response to the recent Insolvency and Corporate Governance Consultation has increased the emphasis on flexibility and the restructure and rescue of businesses. However, along with the recent October Budget, there are proposed reforms which are set to increase the focus and accountability for directors of companies.

Preliminary Moratorium

One of the key new proposals to be introduced with the aim of rescuing companies is a "Preliminary Moratorium".

(Bankr. S.D. Ind. Dec. 4, 2017)

The bankruptcy court grants the motion to dismiss, finding the defendant’s security interest in the debtor’s assets, including its inventory, has priority over the plaintiff’s reclamation rights. The plaintiff sold goods to the debtor up to the petition date and sought either return of the goods delivered within the reclamation period or recovery of the proceeds from the sale of such goods. Pursuant to 11 U.S.C. § 546(c), the Court finds the reclamation rights are subordinate and the complaint should be dismissed. Opinion below.