On June 20, 2024, the United States Bankruptcy Court for the Southern District of Texas (the “Court”) issued a memorandum decision and order in the adversary proceeding involving Robertshaw US Holding Corp.

The U.S. Supreme Court’s opinion is Truck Insurance Exchange v. Kaiser Gypsum Co., Inc., Case No. 22-1079, Decided June 6, 2024.

Opinion’s Q & A

The Truck Insurance question is this:

• Whether an insurer with financial responsibility for a bankruptcy claim is a “party in interest” under § 1109(b)?

The Supreme Court’s answer is this:

The U.S. Court of Appeals for the Eleventh Circuit recently held that the anti-modification provision in the federal Bankruptcy Code applies to loans secured by mixed-use real properties, such as the large parcel at issue here which functioned both for commercial use and as the debtor’s principal residence.

A copy of the opinion in Lee v. U.S. Bank National Association is available at: Link to Opinion.

From the West Coast Healthcare Deskis an ongoing series of Holland & Knight Healthcare Blog articles and alerts focused on healthcare industry developments and points of interest in the West Coast healthcare marketplace. Holland & Knight's nationally ranked healthcare practice has been focused on healthcare compliance, transactional, reimbursement and operational trends that have often started in California before spreading nationwide – managed care and various capitated and quality-based reimbursement models being the most obvious examples.

Harrington v. Purdue Pharma L.P., No. 23-124

Today, the Supreme Court held 5-4 that the Bankruptcy Code does not allow a bankruptcy court to discharge claims against a non-debtor without the consent of affected claimants.

Deal structure matters, particularly in bankruptcy. The Third Circuit recently ruled that a creditor’s right to future royalty payments in a non-executory contract could be discharged in the counterparty-debtor’s bankruptcy. The decision highlights the importance of properly structuring M&A, earn-out, and royalty-based transactions to ensure creditors receive the benefit of their bargain — even (or especially) if their counterparty later encounters financial distress.

Background

The securitization or structured finance market has evolved from its early origins focused primarily on financial assets (e.g., mortgages, receivables, loans credit card accounts, etc.) to the world of non-traditional or esoteric securitizations with exciting new assets.

In a decision that will have substantial impact on the owners of businesses that seek relief in bankruptcy where the business owners themselves seek releases from personal liability, the U.S. Supreme Court has struck down the validity of nonconsensual third-party releases in an opinion issued Thursday, June 27, 2024. The case arose from the bankruptcy proceedings of drugmaker Purdue Pharma, owned by Sackler family members. The decision potentially exposes the Sackler family members to personal liability relating to Purdue Pharma’s sale of opioid medications.

The BRG Corporate Finance Key Economic Data Report reviews GDP and consumer confidence; inflation and real earnings; employment; housing; auto sales and production; retail sales; interest rates; high-yield index; bankruptcies; defaults; and commodity prices.

Read the reports from 2024:

Unlike traditional Chapter 11 bankruptcy cases, sometimes called "free fall" cases, where a debtor files for bankruptcy and determines its path out of bankruptcy over the course of the following months, some debtors enter into bankruptcy with a plan entirely (or mostly) drafted, with an emergence strategy already completed. In these cases, debtors enter bankruptcy with pre-packaged plans or pre-negotiated plans (sometimes called pre-arranged plans) ready to file on or just after their petition date.