Is an involuntary bankruptcy, filed by an owner/creditor of the Debtor, filed in good faith or in bad faith?
That’s the question before the U.S. Supreme Court on which it denied certiorari on October 30, 2023 (Wortley v. Juranitch, Case No. 23-211).
Here’s the gist of the case.
Your customer, who has always paid on time, has started to fall behind on payments and maybe has even started to short pay invoices. When you inquire about what is going on, your customer has a million excuses but assures you that everything is fine. On the one hand, you want to continue to do business with this long-standing customer. On the other hand, you are worried about the growing accounts receivable and a potential bankruptcy filing by your customer. How can you protect your business?
Key Issues
In a recent opinion, the Fifth Circuit reaffirmed and applied its holding from OGA Charters. In doing so, it blocked (via a bankruptcy adversary proceeding) one set of plaintiffs from keeping an insured’s entire policy limit, which the insurer paid as per Texas’ “first come first served” approach to time-limited policy limits demands.
Celsius’ retail borrowers finally have an answer on who owns the cryptocurrency they deposited into Celsius in exchange for a loan from Celsius – spoiler alert: on November 13, 2023 the bankruptcy court held that Celsius’ terms of service “clearly and unambiguously” gave Celsius ownership of retail borrowers’ cryptocurrency. The bankruptcy court’s decision follows its January 2023 decision which similarly held that the cryptocurrency of Celsius’ “Earn” customers also belonged to Celsius because the terms of service similarly unambiguously granted Celsius title ownership.
On November 3, 2023, the Court in the Chapter 9 bankruptcy case of the City of Chester, Pennsylvania issued its ruling in an adversary proceeding challenging the perfection of the liens securing certain revenue bonds issued by the City.1 Confirming the municipal bond market’s longstanding understanding, the Court concluded that the liens on revenues were prope
What is causing supply chain pressure and how can you spot the red flags?
Increase in insolvencies
Insolvency rates in the manufacturing and construction industries are higher than pre-pandemic levels and are showing an upward trend on a year-by-year basis since 2021.
The U.S. Trustee is on a crusade to eradicate every type of third-party release from all Chapter 11 bankruptcy plans—no matter what the facts or circumstances might be.
It’s a policy based on the idea that, if the Bankruptcy Code doesn’t specifically and explicitly authorize something, then that something cannot be done . . . ever . . . under any circumstances . . . no matter what . . . period . . . end of story.
We now have another manifestation of that bright-line and unyielding position. Fortunately, the Bankruptcy Court rejects the U.S. Trustee’s objection.
Over the past several years, unitranche facilities have become increasingly prevalent. This growth has been driven by the ever-growing class of private credit and direct lenders who initially developed the unitranche facility structure, along with traditional bank lenders now joining this market. The unitranche structure has several advantages, including typically quicker execution for the parties involved and in some cases a lower cost of capital to the borrower.
As discussed in our post last month, it was a long road for Arrowood Indemnity to be placed into liquidation in Delaware.
The overwhelming majority of my practice has involved larger, complex Chapter 11 cases and out-of-court restructurings, representing debtors, Chapter 11 trustees, committees, or creditors. However, with the expansion during Covid of the Subchapter V debt limit to $7.5 million, I have found myself participating in multiple Subchapter V cases as counsel to creditors. I discovered quickly that habits developed in larger Chapter 11 cases do not necessarily translate to Subchapter V.