A recent decision from the United States Bankruptcy Court for the Western District of Texas touched on two popular bankruptcy topics: notice requirements and the effect of a bankruptcy discharge on claims.
Steve McCroskey: Jacobs, I want to know absolutely everything that’s happened up ‘til now.
Jacobs: Well, let’s see. First the earth cooled. And then the dinosaurs came, but they got too big and fat, so they all died and they turned into oil. . . .
-Airplane II: the Sequel
As one bankruptcy court has said, “[b]ecause deals are the heart and soul of the [c]hapter 11 process, bankruptcy courts enforce them as cut by the parties.” Unfortunately, however, deals do not always turn out as the parties expected and there is sometimes litigation to determine what exactly was bargained for in a chapter 11 plan.
“I can [resolve] that” – Sam the Onion Man, Holes (as modified)
Are a debtor’s net operating losses considered property of the estate when they are reported on a consolidated tax return by a non-debtor parent? We previously wrote about this issue here.
Secured creditors naturally want to be repaid. Sometimes secured creditors go as far as asking a debtor to waive its right to seek bankruptcy protection. Although such clauses are frequently held to be unenforceable, we previously have discussed exceptions for LLCs.
Undersecured creditors may breathe a little easier. In a recent decision, the United States Bankruptcy Court for the Northern District of Illinois denied the debtors’ request to use an undersecured creditor’s cash collateral, in the form of postpetition rents, to pay estate professional fees, holding that the undersecured creditor was not adequately protected even though the value of its collateral was stable and possibly increasing.
The question “Where’s the Beef?” is typically associated with the famous Wendy’s television commercial from 1984 and its lovable actress, Clara Peller. But the recent decision in the chapter 7 case of a national meat processor had an avoidance action defendant asking, “Where’s the Beef … (with me)?” after the debtor’s chapter 7 trustee attempted to avoid over $5 million in transfers made by the debtor to the defendant prepetition.
Discounted cash flow analysis is a mainstay among the valuation methodologies used by restructuring professionals and bankruptcy courts to determine the enterprise value of a distressed business. Despite its prevalence, the United States Bankruptcy Court for the Southern District of New York recently concluded the DCF method was inappropriate for the valuation of “dry bulk” shipping companies.