In its recent opinion in Raymond James & Associates Inc. v. Jalbert (In re German Pellets Louisiana LLC), 23-30040, 2024 WL 339101 (5th Cir. Jan. 30, 2024), the Fifth Circuit held that a confirmed bankruptcy plan enjoined a party from asserting certain indemnification counterclaims against a plan trustee because the party did not file a proof of claim.

Background

On April 22, 2024, in the chapter 11 cases of GOL Linhas Aéreas Inteligentes S.A.

To file bankruptcy in the U.S., a debtor must reside in, have a domicile or a place of business in, or have property in the United States. 11 U.S.C. § 109(a). In cross border chapter 15 cases, courts have considered whether a representative of a foreign debtor must satisfy that jurisdictional test.

Debtor’s Chapter 11 counsel cannot be compensated for services performed after a trustee is appointed and the debtor removed from possession.

• That’s the rule of law in the Fifth Circuit and in a not-for-publication decision of the Ninth Circuit’s Bankruptcy Appellate Panel, based on a U.S. Supreme Court ruling.

So . . . the question is, what about Subchapter V? Does that same no-compensation rule apply in Subchapter V when the debtor is removed from possession?

Ninth Circuit BAP Opinion

As you know from our prior alerts, creditors of borrowers formed as Delaware LLCs (as opposed to corporations) lack standing under Delaware law to sue directors for breaching fiduciary duties even when, to the surprise of many, the LLC is insolvent. See our prior Alert. The disparity of substantive creditor rights depending entirely on corporate form results from two aspects of Delaware law.

At a hearing in mid-March, the Delaware bankruptcy court held Camshaft Capital Fund, LP, Camshaft Capital Advisors, LLC, Camshaft Capital Management (collectively, “Camshaft”) and William Cameron Morton, principal of Camshaft, in civil contempt. The case is noteworthy because the court not only imposed monetary sanctions but also ordered civil confinement to compel Camshaft and Morton to comply with the court’s prior discovery order. The court issued a supplementary opinion on April 3, 2024, after Camshaft appealed.

Customers are the lifeblood of a retail company. Through purchases of merchandise, they provide necessary liquidity for the retailer’s operations and going-concern value. For many retailers, this liquidity often comes in the form of customer deposits for merchandise to be manufactured by the retailer and received by customers at a future date.

Introduction

On April 23, 2024, the American Bankruptcy Institute’s Subchapter V Task Force issued its Final Report.

This article is the first in a series that summarizes and condenses the Task Force’s Final Report into “a nutshell.” This article:

• provides background information and data on Subchapter V.[Fn. 1]

Overall

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Restructuring partner Alice Eaton spoke on the panel “Adjusting to a New Era: Redefining Value Creation in Uncertain Times,” as part of the Wharton School of the University of Pennsylvania’s 2024 Private Equity and Venture Capital Conference on March 29. The panel covered the use of innovative financing instruments and structures for investments in distressed assets.

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