Welcome to Distressed Debt Legal Insights, Ropes & Gray’s source of timely insights for professionals navigating the complex world of liability management and special situations finance. In this issue we discuss the first major decision of 2026: STG Logistics. The January 3 opinion primarily denies the motions to dismiss brought by defendants seeking to validate their October 2024 drop down plus double dip transaction.
Transaction Details and Procedural History
The U.S. Supreme Court does not like the Bankruptcy Code. It never has. Two examples are:
Key Points
Mass torts and resulting litigation are a reality of life in these United States.
But one of the truly shocking things about mass tort litigation, in recent times, is this:
- judicial delays override the wishes of mass tort victims for prompt payment of negotiated amounts.
A current example of such delays is the Boy Scouts confirmed bankruptcy plan.
Chronology
Here is a short Chronology of the Boy Scouts bankruptcy plan—and the lapse of more than three years since confirmation without a final resolution:
The Uniform Law Commission (“ULC”) is the same organization that brought us the Uniform Commercial Code, the Uniform Trust Code, and other “Uniform” state laws.
The ULC is now offering a Uniform Assignment for Benefit of Creditors Act (the “Uniform ABC Act”).
The new Uniform ABC Act codifies the common law of ABCs. Such common law has its foundation in the law of trusts: i.e., debtor is the trustor, assignee is the trustee, and debtor’s creditors are the beneficiaries.
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The Supreme Court of New South Wales has clarified the circumstances in which a liquidator may recover deposit funds paid to a third party and the extent to which a counterparty may rely on the good-faith defence under section 588FG of the Corporations Act 2001 (Cth).
Before the US Supreme Court’s landmark decision in Purdue Pharma,1 it had become common practice for Chapter 11 debtors to include a consensual or nonconsensual non-debtor third-party release in their plans of reorganization.