A recent opinion from the U.S. Court of Appeals for the Third Circuit confirms that “actual control” over a debtor is not necessary to qualify as a nonstatutory “insider” for the purpose of extending the period for preference recovery under Section 547 of the Bankruptcy Code. See Schubert v. Lucent Technologies, Inc. (In re Winstar Communications, Inc.), 554 F.3d 382 (3rd Cir. 2009).

The U.S. Court of Appeals for the Fourth Circuit recently issued a decision that has the potential to have a major impact on how contracts that provide for physical delivery of commodities are treated under U.S. bankruptcy law.  

The U.S. Bankruptcy Court for the District of Delaware recently issued a decision addressing triangular set-off provisions, which potentially has very far-reaching implications for the enforceability of contractual set-off rights under U.S. law.

A known creditor, which was aware of a debtor’s pending bankruptcy but did not receive legally required notice of the debtor’s chapter 11 case, was not barred from bringing a state action following bankruptcy discharge.

The U.S. Court of Appeals for the First Circuit held that actual knowledge of the pending chapter 11 case did not satisfy due process requirements; therefore, the known creditor’s subsequent claim was not barred by the debtor’s discharge injunction. Arch Wireless, Inc. v. Nationwide Paging, Inc. (In re Arch Wireless, Inc.), 534 F.3d 76 (1st Cir. 2008).

Companies that engage in multiple transactions with different entities of related groups often enter into contractual netting agreements that allow the setoff of obligations between entities within the groups. The effectiveness of these agreements has been called into question by a recent decision of a bankruptcy court in Delaware, which refused to allow a party to a contractual netting agreement to offset its obligations to the debtors against obligations of the debtors under the netting agreement.

The U.S. Court of Appeals for the Ninth Circuit has held that a bankruptcy trustee could not avoid an unauthorized sale of real estate to a bona fide purchaser— although the proceeds of the sale did belong to the estate.

The court ruled that an unauthorized postpetition transfer of real property in California could be avoided only if the buyer had actual knowledge of a bankruptcy filing, or if the trustee recorded the transfer of title to the property from the debtor to the estate in the land records of the applicable county, In re Tippett, 542 F.3d 684 (9th Cir. 2008).

Troubled economic times predictably result in an escalation in bankruptcy filings. As the economy began to worsen last year, the U.S. Court of Appeals for the Fifth Circuit issued a reminder that courts can—and will—penalize parties that tax an already busy bankruptcy court system with bad faith filings.

Under the “American Rule” concerning the recovery of attorney’s fees in pursuing breach of contract litigation, the prevailing party is awarded fees if the contract or an applicable statute provides for such recovery. Some states also allow a judgment creditor to recover fees incurred in enforcing the judgment, if the judgment was based on a contract or statute that authorized fees in the original litigation. See, e.g., California Code of Civil Procedure § 685.040.

Yesterday, in a bankruptcy court hearing held for Chrysler LLC (and 24 of its wholly owned subsidiaries), which filed for Chapter 11 bankruptcy protection last Thursday, U.S.

Chrysler's bankruptcy filing, which occurred on April 30, has generated considerable activity already. Baker Hostetler has been monitoring closely the Chrysler activity for our supplier clients. We attended the hearing on the first day filings, which were generally ministerial in nature. The court approved joint administration, maintenance of cash management/business forms, enforcement of automatic stay, payment of wages, and honoring of all warranties.