One of the primary reasons that most debtors seek bankruptcy relief is the automatic stay, which prevents creditors from pursuing collection efforts outside of the bankruptcy proceedings. Creditors can, however, seek relief from the automatic stay from the bankruptcy court under certain circumstances.

The Supreme Court recently granted certiorari in PEM Entities LLC v. Levin, in which it will decide whether federal or a state law should apply when a debt claim held by a debtor’s insider is sought to be recharacterized in bankruptcy as a capital contribution and treated as equity. The case raises important questions about the extent to which the commencement of a proceeding under the U.S.

Prospector Offshore Drilling S.à r.l., and 3 of its affiliates, has filed for chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware (Lead Case No. 17-11572). The entities are affiliates of the Paragon debtors that filed for chapter 11 on February 14, 2016.

The Bankruptcy Appellate Panel of the U.S. Court of Appeals for the Sixth Circuit recently held that the bankruptcy court lacked subject matter jurisdiction under the Rooker-Feldman doctrine to void the foreclosure of a mortgage lien that was executed by the debtors before bankruptcy, but recorded while the automatic stay was in effect. 

When a defaulted borrower files a bankruptcy petition, two important events occur: (1) a bankruptcy “estate” comprised of certain assets of the debtor is created; and (2) all collection efforts (and pending litigation) against the debtor or its assets are automatically stayed. Accordingly, the court’s determination of whether items are or are not property of the debtor and of the bankruptcy estate is of critical importance to the creditor’s ability to collect on its debt.

Despite a modest uptick in recent years, it is still a relatively rare occasion for the Supreme Court of the United States to tackle issues involving bankruptcy. This term, however, the Supreme Court has granted certiorari in two bankruptcy appeals that could have important consequences for the financial community. In FTI Consulting, Inc. v. Merit Management Group, LP, the Court will define the parameters of the safe harbor of Bankruptcy Code section 546(e), which excludes certain financial transactions from the debtor’s avoidance powers. In PEM Entities LLC v.

In an era when goods or materials often originate from suppliers or manufacturers outside the United States, bankruptcy courts are grappling with when “receipt” of goods occurs for the purpose of 503(b)(9) claims.

The U.S. Court of Appeals for the Eleventh Circuit recently held that section 707(b) of the Bankruptcy Code, which allows a bankruptcy court to dismiss a chapter 7 petition if it finds that relief would be an “abuse” as defined in that section, applies to a petition initially filed under chapter 13 and converted to chapter 7.

A copy of the opinion is available at:  Link to Opinion.

The Sixth Circuit Court of Appeals recently took up the controversial issue of whether a liquidating trustee’s lawsuit, alleging breach of fiduciary duty against a corporate debtor’s officers, falls within the “insured-versus-insured” exclusion of the debtor’s liability policy. See, Indian Harbor Insurance Company v. Clifford Zucker in his capacity as Liquidating Trustee for the Liquidating Trust of Capitol Bancorp Ltd. and Financial Commerce Corporation, 2017 FED. App. Nos.

The Bankruptcy Appellate Panel of the U.S. Court of Appeals for the Sixth Circuit recently held that a mortgage foreclosure deficiency judgment lien may be avoided under 11 U.S.C. § 522(f)(2), reversing the bankruptcy court’s ruling to the contrary.

A copy of the opinion is available at: Link to Opinion.