Today we’ll begin with a two-part question: When do you suppose you could (i) hold a debtor’s property hostage without running afoul of the automatic stay and (ii) also collect on an administrative expense for postpetition rent for leased space used to store such property?

If you don’t already know the answers to the above questions, perhaps an overview of a recent decision from the Bankruptcy Court for the District of New Jersey will provide some insight.

On April 15, 2016, the IRS released a generic legal advice memorandum (GLAM 2016-001) (the “April GLAM”) addressing the impact of so-called “bad boy” guarantees (also known as nonrecourse carve-out guarantees) on the characterization of underlying partnership debt as recourse vs. nonrecourse under Section 752 of the Internal Revenue Code.

(6th Cir. B.A.P. May 11, 2016)

The Bankruptcy Appellate Panel reverses the bankruptcy court’s order allowing the unsecured creditor’s late-filed claim in this Chapter 13 case. The creditor filed its claim eight days after the bar date, and the bankruptcy court allowed the claim based on excusable neglect. The B.A.P. holds that a bankruptcy court does not have authority to extend the deadline in Rule 3002(c) through equitable powers or the doctrine of equitable tolling. Opinion below.

Judge: Humphrey

TGIF, right?! Before kick starting your weekend — here’s what you need to know about the recent decision from the United States Court of Appeals for the Third Circuit in the chapter 11 cases of SemCrude L.P. and its debtor affiliates.

FACTS

The United States Bankruptcy Court for the Southern District of Ohio, Eastern Division, (“the Court”) held in In re John Joseph Louis Johnson, III, Case No. 14-57104, 2016 WL 1719149, that a creditor violated the automatic stay by seeking to enforce an arbitration award against nondebtor co-defendants. The automatic stay applies not only to stay actions against the debtor personally but also prohibits “any act to … exercise control over property of the [debtor’s bankruptcy] estate.” 11 U.S.C.

Earlier this month, teen clothing retailer Aéropostale filed for Chapter 11 bankruptcy protection, seeking to immediately close 154 of its over 800 stores located throughout the United States and Canada. Many of these stores are located in smaller shopping malls, which have been hit the hardest by the shift to online shopping.

The continued march of retail bankruptcies since 2015 includes Sports Authority, Vestis Retail Group, Inc. (the operator of Sports Chalet, Eastern Mountain Sports, and Bob’s Stores), Radio Shack, American Apparel, Quicksilver, Wet Seal, Delia’s and PacSun.

This is the second of a three-part series on letters of credit by attorneys in Fox Rothschild’s Financial Restructuring & Bankruptcy Practice. In Part I, we focused on the advantages of letters of credit as a credit enhancement tool. Here, in Part II, we explore the use of letters of credit as collateral in bankruptcy proceedings.

Click here to view the table.

Bankruptcy lawyers across the country learned this lesson in 2015: A fine year can be a flat year.

On 25 May, the Insolvency Service published a consultation paper on options for reform of the UK's corporate insolvency regime. Their impetus is for the UK to remain at the forefront of insolvency best practice to ensure businesses, investors and creditors remain confident that best outcomes can be achieved when faced with financial difficulty, and to give a company the best possible chance to restructure its debts and return to profitability while protecting employees and creditors.

Picard, a trustee in bankruptcy, launched proceedings under the anti-avoidance provisions of the US Bankruptcy Code against Vizcaya, a BVI investment fund which had invested approximately $330m with Bernard Madoff via his New York firm. Prior to his fraud being discovered in late 2008, Vizcaya had been repaid $180m.Picard obtained a judgment against Vizcaya and its shareholders in the New York Bankruptcy Court. The judgment against Vizcaya was for $180m, $74m of which had been transferred to its Gibraltar holdings.