You just heard a rumor that your largest retail customer is in financial distress and may file for bankruptcy. After a moment of panic, you review your consignment agreement with the retailer (this assumes that you have a written agreement) and you are relieved to see that it clearly provides that you still own the goods that you delivered to your customer and you are entitled to pick them up at any time. All good, right? Not necessarily.
We recently reported on Delaware Judge Christopher Sontchi’s decision in the Extraction bankruptcy to permit the rejection of midstream gathering agreements.1 Fellow Delaware Judge Karen Owens followed Extraction in the Southland Royalty decision issued November 13, 2020.2 Judge Owens determined that Southland Royalty Company, LLC (“Southland”), an E&P operator with assets primarily in Wyoming, could reject the gas gathering agreement and sell its assets free and clear of the agreement.
COVID-19 Cuts a Harsh Path Through the Aviation Sector
A lender’s state law tort claims against “non-debtor third-parties for tortious interference with a contract” were “not preempted” by “federal bankruptcy law,” held the New York Court of Appeals on Nov. 24, 2020. Sutton 58 Associates LLC v. Pilevsky, 2020 WL 6875979, *1 (N.Y. Ct. Appeals, Nov. 24, 2020) (4-3). In a split opinion, the Court of Appeals reversed the Appellate Division’s dismissal of a lender’s complaint against the debtors’ non-debtor insiders. The lender will still have to prove its case at trial.
The Asserted Claims
Introduction
From iconic retail brands like Neiman Marcus to popular entertainment venues like Chuck E. Cheese, business bankruptcies have escalated in 2020 due to the COVID-19 pandemic. Company executives invested in Non-Qualified (NQ) plans risk losing a substantial amount in retirement savings due to guidelines set under Section 409A. These guidelines protect NQ plan assets from a change in corporate control but not from a bankruptcy filing, since NQ plan participants are treated as unsecured creditors.
2020 has seen a significant increase in chapter 11 filings by oil and gas producers. Critical to the operations of these companies, and to the transportation and processing of the producer’s gas, are gathering agreements entered into between the producers and midstream companies. A pivotal question posed at the start of these chapter 11 proceedings is whether the gathering agreements are executory contracts subject to rejection or whether they create real property interests that cannot be rejected in chapter 11 proceedings. The answer depends on who you ask.
The U.S. Bankruptcy Court for the Northern District of Georgia ruled in In re Serendipity Labs, Inc., 620 B.R. 679 (Bankr. N.D. Ga.
On November 25, the U.S. Court of Appeals vacated summary judgment in favor of defendants in an action alleging the defendants violated the FDCPA by attempting to collect a debt that was discharged in a bankruptcy proceeding and no longer owed.