The latest in a line of fraudulent transfer decisions in the Madoff case has added to the case-law regarding what level of knowledge is needed to plead actual fraud in securities Ponzi scheme cases.
As avid blog readers know, we’ve posted extensively on make whole issues, including several articles covering the ongoing make whole litigations in the chapter 11 cases of Energy Future Holdings and its affiliated debtors, which can be found here,
Here, at the Bankruptcy Blog, we are committed to keeping you up to speed on the current state of bankruptcy law. Today’s post provides readers with an update to a decision by the United States Bankruptcy Court for the District of Delaware, which considered whether the debtors were required to assume a bundle of related agreements as one executory contract, or whether the debtors could assume only those agreements that contained provisions most favorable to their ongoing operations.
In a highly anticipated decision issued last Thursday (on December 19, 2019), the United States Court of Appeals for the Third Circuit held in In re Millennium Lab Holdings II, LLC that a bankruptcy court may constitutionally confirm a chapter 11 plan of reorganization that contains nonconsensual third-party releases. The court considered whether, pursuant to the United States Supreme Court’s decision in Stern v. Marshall, 564 U.S. 462 (2011), Article III of the United States Constitution prohibits a bankruptcy court from granting such releases.
Overview
In Asarco, LLC v. Noranda Mining, Inc., the Tenth Circuit Court of Appeals held that representations made to the bankruptcy court that the Debtor’s settlement of environmental claims reflected only the Debtor’s share of the cleanup costs did not judicially estop the Debtor from brining a contribution claim against another potentially responsible party for those same costs.
Under Section 363(f) of the Bankruptcy Code, a debtor or trustee can sell estate assets “free and clear of any interest” in such assets. This short, simple string of six words represents one of the most powerful tools in the bankruptcy professional’s arsenal.
A recent decision from the United States Bankruptcy Court for the Western District of Texas caught our eye because of the unconventional opening line:
“Summers are hot in Texas, so pools are a hot item. But not hot enough to help a pool installer [ . . . ] avoid bankruptcy” – Judge Tony M. Davis, United States Bankruptcy Judge.
What happens when the counterparties on both sides of a contract are debtors in separate bankruptcy cases and their estates have contrary views about whether to reject or assume a contract?
Federal bankruptcy law can benefit debtors and creditors alike. Provisions such as the automatic stay and absolute priority ensure a streamlined proceeding, preserving the debtor’s scarce resources for business rehabilitation and creditor repayment. The alternative, multiple state court debt enforcement actions, would waste the debtor’s time and money on litigation (as valuable as bankruptcy lawyers may be).