"When a modification to a Chapter 11 reorganization plan materially and adversely affects the treatment of a class of claim or interest holders, those claim or interest holders are entitled to a new disclosure statement and another opportunity to vote.” In re America-CV Station Group, Inc., 2023 WL 109967 (11th Cir. Jan. 5, 2023). In this case, the U.S. Court of Appeals for the Eleventh Circuit just upended a hastily confirmed reorganization plan.

In a January 2023 opinion,1 the Southern District of New York Bankruptcy Court overseeing the bankruptcy case of Latin American airline Avianca and certain of its affiliates sanctioned over 150 of the airline’s Brazilian and Columbian creditors who had filed proofs of claim in the bankruptcy case finding t

What does it mean to own something? When should the law acknowledge that somebody really owns something, even if they don't formally own it?

And when will courts recognize the economic reality that one person — say, a judgment debtor — in truth owns something, notwithstanding that person's painstaking efforts to keep formal legal title in the hands of others?

The law has long recognized doctrines to disregard the existence, or pierc the veil, of corporate entities to which a debtor has transferred assets.

The concept of “property of the estate” is important in bankruptcy because it determines what property can be used or distributed for the benefit of the debtor’s creditors. Defined by section 541 of the Bankruptcy Code, “property of the estate” broadly encompasses the debtor’s interests in property, with certain additions and exceptions provided for in the Code. See 11 U.S.C. § 541. Difficult questions can arise in a contractual relationship between a debtor and a counterparty about whether an entity actually owns a particular asset or merely has some contractual right.

On Monday, January 30, 2023, the Third Circuit in In re LTL Management, LLC¹ ordered debtor LTL Management, LLC’s (“LTL”) chapter 11 petition dismissed for failure to demonstrate that the petition was filed in good faith pursuant to the Bankruptcy Code.² The dismissal of LTL’s bankruptcy will also result in the termination of an injunction staying numerous lawsuits against third-parties—including lawsuits against certain third-party retailers being sued for allegedly having sold certain allegedly contaminated products.

In a decision likely to have significant impact on certain types of bankruptcy filings going forward, this morning, the Third Circuit Court of Appeals ordered the dismissal of the Chapter 11 bankruptcy case filed by Johnson & Johnson affiliate LTL Management LLC.

In Sanofi-Aventis U.S. LLC v. Mallinckrodt PLC,¹ the United States District Court for the District of Delaware ruled that a debtor that purchased intellectual property under a prepetition asset purchase agreement could continue to retain and use the property post-confirmation while discharging its obligations to pay any future royalties otherwise owed. The decision highlights the importance of structuring transactions up-front to minimize the consequences of future bankruptcies.

Background

Should a bankruptcy court’s preliminary injunction be subject to appellate review?Taking the negative position, the U.S. District Court for the Eastern District of New York recently held that it had the “discretion … to decline to hear” an appeal from a bankruptcy court’s preliminary injunction. Navient Solutions, LLC et al. v. Homaidan et al., 2022 WL 17252459, *4 (E.D.N.Y. Nov. 28, 2022), quoting In re Kassover, 343 F.3d 91, 95 (2d Cir.

When a court-appointed trustee or liquidator is tasked with liquidating an entity, they need to gain possession of all of the entity’s assets. In crypto cases, this task can prove difficult when trying to identify and control all of the entity’s different digital assets and obtain cooperation from the entity’s former operators. Unfortunately, in the case of Three Arrows Capital (“3AC”), the two founders have refused to cooperate with recovery efforts and have absconded to unknown foreign countries.

Judge Martin Glenn of the United States Bankruptcy Court for the Southern District of New York issued a ruling last week in the Celsius Network bankruptcy case addressing whether customer deposits on a cryptocurrency exchange or platform are property of the debtor or property of the customer. The answer, not surprisingly, depends on the Terms of Use governing the account in question. In this case, the Court found that the terms clearly and unambiguously provided that ownership of cryptocurrency assets deposited into “Earn Accounts” resides with Celsius.