This ideal is floating around:
- upon removal of a Subchapter V debtor from possession, for fraud or other cause,
- the Subchapter V trustee has no expanded right, power, function or duty beyond operating debtor’s business (the “Ideal”).
This Ideal is both:
- contrary to unambiguous language of the Bankruptcy Code, as a matter of law; and
- in Never-Never Land, as a matter of practice.
I’ll try to explain.
This is a truism:
After years of litigation involving state, federal, Irish, and (to a lesser extent) Swiss law; transfers of numerous assets, including Ireland’s priciest-personal residence; a jury trial; and extensive post-trial briefing, the Second Circuit made short shrift of a former real estate mogul and his ex-wife’s appeal of a judgment rendered against them for fraudulent conveyances.
A study on using round-number offers and precise-number offers in negotiations reaches these two conclusions:
The volatility of the global economy is something that is hard to ignore in day-to-day life. Whether it is the price at the pump, cost of groceries or interest rate considerations when buying a home or a vehicle – we have all been impacted in one way or another. These impacts are not only felt by individuals or households, but companies too have been put under increased strain with the rising cost of debt and liquidity constraints.
In the November 2023 edition of the Restructuring Department Bulletin, we highlight recent decisions and developments impacting the restructuring arena and share the latest news on the Paul, Weiss Restructuring Department.
In Breanne Martin v. Leslie Gladstone, the Second District Court of Appeal recently decided a case that could reverberate throughout the receivership and bankruptcy industries. This case comes at a propitious moment as bankruptcy proceedings and receiverships – particularly for distressed commercial real estate entities – trend upward in California. Receivers and bankruptcy trustees alike should consider this case before operating a commercial real estate distressed entity.
The Doughertys’ Bankruptcy Proceeding
Here’s the latest opinion on a controversial question: In re Franco’s Paving LLC, Case No. 23-20069, Southern Texas Bankruptcy Court, (decided 10/5/2023; Doc. 74).
The Question & Answer
Voter apathy is a problem in Subchapter V cases. That apathy is in the form of creditors failing or refusing to vote on a Subchapter V plan. The In re Franco’s opinion addresses this apathy problem head-on.
If your company is named in a new lawsuit or receives a EEOC charge, part of your review process should include checking to see if the filing complainant or plaintiff has a pending bankruptcy action. If so, the next step is to see if the claimant disclosed their lawsuit or administrative complaint in his or her bankruptcy petition. If not, you may have a successful estoppel argument.
In Short:
The Situation: After the nationalization of the Dutch SNS banking and insurance group, the Dutch Minister of Finance offered zero compensation to expropriated bondholders.
The Result: Ten years after the nationalization, the Dutch Supreme Court confirmed compensation awards totaling approximately €1 billion including accrued interest.
Looking Ahead: The SNS case provides some interesting lessons on where those seeking compensation in the context of bank bailouts and resolutions may head.
Recent expressions of concern about courts mandating mediation reminded me of a mandated mediation process that worked well: the City of Detroit bankruptcy.
An illustration of the success of mandated mediation in the Detroit case is this line:
The Bankruptcy Judge“put an end to the public bickering over the water deal by ordering the parties into confidential mediation.”