Chapter 15 of the Bankruptcy Code is designed to provide an effective mechanism to aid insolvency proceedings in foreign countries that involve a foreign debtor with assets, creditors and other parties in interest located in the foreign country as well as in United States. A foreign representative that is authorized to administer the foreign reorganization or liquidation or act as a representative of the foreign proceeding is the party who applies to the US bankruptcy court for recognition of the foreign proceeding.

Europe, the U.S. and Canada—On 7 May 2013, the US Bankruptcy Court for the District of Delaware denied a motion by European creditors of Nortel Networks Corp. ("Nortel") to certify a direct appeal to the U.S. Court of Appeals for the Third Circuit of the bankruptcy court's 3 April 2013 ruling (Inre Nortel Networks, Inc., Case No. 09-10138 (KG), 2013 BL 92666 (Bankr. D. Del. Apr.

Chapter 11 debtors and sophisticated creditor and/or shareholder constituencies are increasingly using postpetition plan support agreements (sometimes referred to as “lockup” agreements) to set forth prenegotiated terms of a chapter 11 plan prior to the filing of a disclosure statement and a plan with the bankruptcy court. Under such lockup agreements, if the debtor ultimately proposes a chapter 11 plan that includes prenegotiated terms, signatories are typically obligated to vote in favor of the plan.

On April 30, 2013, the United States Court of Appeals for the Ninth Circuit held that the bankruptcy court has authority to recharacterize as equity, rather than debt, advances of funds made purportedly as a loan to the recipient prior to its bankruptcy. In re Fitness Holdings International, Inc., --- F.3d ----, 2013 WL 1800000 (9th Cir. 2013).

On May 10, 2013, Judge Brendan Linehan Shannon of the United States Bankruptcy Court for the District of Delaware rejected an attempt to hold a private equity sponsor liable for its portfolio company’s alleged violations of the federal Worker Adjustment and Retraining Notification Act (the “WARN Act”) under the “single employer” theory of liability.

The United States Bankruptcy Court for the Southern District of New York granted motions to dismiss involuntary Chapter 7 petitions filed against TPG Troy LLC and T3 Troy LLC (the Troy Entities). Petitioners filed numerous actions against the Troy Entities in the United States and Europe to recover money they alleged was owed in connection with the default of payment-in-kind and subordinated notes.

Appellate panel affirms that creditor’s failure to seek adequate protection before turning collateral over to trustee terminates possessory lien.

On March 25, 2013, the Eighth Circuit Bankruptcy Appellate Panel affirmed the bankruptcy court’s order in In re WEB2B Payment Solutions, Inc., holding that a creditor loses its possessory lien when it turns collateral over to the bankruptcy trustee without first seeking adequate protection from the bankruptcy court.

FACTS

For the last 27 years, bankruptcy courts in the Ninth Circuit consistently held that debt could not be recharacterized as equity unless the movant proved inequitable conduct by the debt holder. On April 30, 2013, the Ninth Circuit Court of Appeals rejected that precedent and joined other circuit courts in holding that bankruptcy courts do have the authority to recharacterize a loan as an equity investment to the extent allowed under state law even without inequitable conduct.

The Ninth Circuit has joined the majority of Circuit Courts in holding that bankruptcy courts have the authority to recharacterize alleged debts as equity. See Official Comm. of Unsecured Creds. v. Hancock Park Capital II, L.P. (In re Fitness Holdings Int’l, Inc.), No. 11-56677, --- F.3d ----, 2013 WL 1800000 (9th Cir. April 30, 2013). In doing so, the appellate court has explicitly reversed the contrary precedent of In re Pacific Express, Inc., 69 B.R. 112, 115 (B.A.P. 9th Cir. 1986).

Introduction