We’ve focused a lot on third-party releases lately, as bankruptcy courts across the country continue to evaluate whether and under what circumstances they are permissible. But, as a recent opinion of the United States Court of Appeals for the Fifth Circuit demonstrates, bankruptcy courts are not the only courts grappling with this issue.[1]
On February 25, 2019, the U.S. Court of Appeals (2nd Circuit) ruled that the trustee in the Chapter 11 case for Madoff Investment Securities, LLC could use the U.S. Bankruptcy Code to recover payments made between foreign entities. Previously, the Bankruptcy Court for the S.D.N.Y. and the U.S. District Court for the S.D.N.Y ruled that the trustee could NOT sue the foreign entities based on principles of international comity and the presumption against extraterritoriality of U.S. Laws, including the U.S. Bankruptcy Code.
Although the Supreme Court identified three guideposts for evaluating whether a punitive award is unconstitutionally excessive 23 years ago in BMW v. Gore and refined those guideposts 16 years ago in State Farm v.
We’ve all heard it said a million times - if it sounds too good to be true, it probably is. But does that age-old maxim apply to a bankrupt customer offering to pay you 100% of your unsecured claim through a “prepackaged” bankruptcy or under a critical vendor program? The answer can be complicated.
This article explores what it means to be “unimpaired” and paid in full in prepackaged bankruptcies and under critical vendor programs and outlines some of the potential pitfalls that can be faced by unsecured creditors under these scenarios.
In determining the legal standard for holding a creditor in civil contempt for attempting to collect a debt in violation of a bankruptcy discharge order, the Supreme Court of the United States adopted an “objectively reasonable” standard, and held that a court may hold a creditor in civil contempt if there is “no fair ground of doubt” as to whether the order barred the creditor’s conduct.
Accordingly, the Supreme Court reversed the Ninth Circuit’s ruling, which had applied a subjective standard for civil contempt.
Clients sometimes ask whether filing bankruptcy can protect them from Federal Trade Commission scrutiny. The saga of Joseph Rensin and his company BlueHippo provides an opportunity to review the limited protection bankruptcy provides from the FTC.
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Webinar
Join Energy and Bankruptcy Law professionals from Thompson Coburn LLP for a one-hour webinar as they address recent developments in the Chapter 11 bankruptcies of PG&E, First Energy and other related cases highlighting the emerging clash between federal energy law and federal bankruptcy law.
In Longoria v. Somers and LC Therapeutics, Inc., C.A. No. 2018-0190-JTL (Del. Ch. May 28, 2019), the Delaware Court of Chancery examined its authority to tax the costs of receivership against the stockholder of an insolvent corporation. The Court’s decision highlights an exception to the general principle that stockholders of a properly maintained corporation are not responsible for costs incurred by the corporation and illustrates a scenario where stockholders may be held liable for a corporation’s obligations.
Asbestos litigation has been consistently active throughout the United States since the first asbestos lawsuit was filed in the 1970s. As the population of asbestos plaintiffs has grown over the last 40 years, so have the funds paid by various asbestos defendants. This growing financial burden has caused numerous asbestos defendants to file for bankruptcy. In doing so, the insolvent defendants are required to create asbestos trust funds for the protection of future asbestos plaintiffs. To date, there are over 50 active asbestos bankruptcy trusts in the U.S.
California Governor Gavin Newsom signed Assembly Bill 1054 into law today, marking a significant financial commitment by the state to shore up the financial position of California's major investor-owned utilities. The new law establishes a Wildfire Fund of up to $21 billion to provide liquidity for utilities to cover eligible, uninsured third-party damage claims resulting from future catastrophic wildfires. The law also establishes a new framework to encourage and certify utility safety practices intended to reduce the risk of wildfires ignited by power infrastructure.