Section 303 of the Bankruptcy Code allows creditors to initiate an involuntary bankruptcy case against a debtor. The petition initiating the case must be filed by creditors holding claims aggregating to at least $10,000, and those claims must not be “contingent as to liability or the subject of a bona fide dispute as to liability or amount.” 11 U.S.C. § 303(b)(1). Courts have disagreed as to how this provision applies when a portion of a claim is undisputed.
If you lend money, you know – or should know – it is a cardinal sin to collect a debt or repossess collateral after a borrower files bankruptcy.
Bankruptcy triggers the automatic stay – a command, not a suggestion, that collection activity cease. This is common knowledge, but every once in a while a case comes along that merits sharing as a reminder of what happens when lenders ignore the Bankruptcy Code.
On December 12, 2019, the Sixth Circuit issued an opinion[1] in the ongoing bankruptcy proceedings of FirstEnergy Solutions Corp. The decision upheld the ability of a bankruptcy court to decide whether a power purchaser in bankruptcy proceedings can reject FERC-approved power purchase agreements (PPAs).
The National Economic Research Associates ("NERA"), an economic consulting firm, demonstrated in a recent article how economic analysis can be used to assess allegations related to credit default swaps ("CDS") and the creditworthiness of a company.
Courts struggled this year to find a balance between state-licensed cannabis activity and the federal right to seek bankruptcy protection under the Bankruptcy Code. During 2019, we had the first circuit-level opinion in the bankruptcy/cannabis space that appeared to open the door to bankruptcy courts, albeit slightly. We also had lower court opinions slamming that door shut. Below, we look at a few of the most important decisions issued throughout 2019 and analyze the current state of the law.
The Ninth Circuit Court of Appeals’ Garvin Decision
A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit has voided its previous near explicit declaration that make-whole provisions are always unmatured interest, and therefore subject to disallowance under section 502(b) of the Bankruptcy Code in Ultra Petroleum.
Withdrawal liability under ERISA can be a significant factor considered by private equity funds in making investments in portfolio companies. And it becomes an even more significant factor if the private equity fund is determined to be a member of the company’s “control group” in which case the fund (and perhaps its partners) c
On December 12, 2019, the United States Court of Appeals for the Sixth Circuit (the “Sixth Circuit”) issued a long awaited decision in the dispute between FirstEnergy Solutions Corp. (“FirstEnergy”), the Federal Energy Regulatory Commission (“FERC”) and certain power purchase contract counterparties, including the Ohio Valley Electric Corporation (“OVEC”).1 The decision helps clarify a murky area of jurisprudence and has significant implications for restructurings in the electric power sector.
“[A] secured creditor [has no] affirmative obligation under the automatic stay to return a debtor’s [repossessed] collateral to the bankruptcy estate immediately upon notice of the debtor’s bankruptcy,” the U.S. Court of Appeals for the Third Circuit held on Oct. 28, 2019. In re Denby-Peterson, 2019 WL 5538570, 1 (3d Cir. Oct. 28, 2019). Affirming the lower courts, the Third Circuit joined “the minority of our sister courts — the Tenth and D.C. Circuits” with its holding.
We recently reported on a decision of the United States Court of Appeals for the Third Circuit in favor of a creditor that seized a debtor’s property pre-petition.