A foreign (non-U.S.) company can be dragged unwillingly into a U.S. bankruptcy case if the bankruptcy court has “personal jurisdiction” over the company.
A foreign (non-U.S.) company can be dragged unwillingly into a U.S. bankruptcy case if the bankruptcy court has “personal jurisdiction” over the company.
In the bankruptcy world, not all claims are created equal. Rather, certain special categories of claims have priority status and are not only paid ahead of other claims, but are also often paid in full. One such category of claims is found in Bankruptcy Code § 503(b)(9), which grants priority claim status for goods which were sold in the ordinary course of business and received by a debtor within the 20-day window leading up to the bankruptcy filing. The code section is very clear, however.
In June 2019, the U.S. Supreme Court issued its unanimous decision in Taggart v. Lorenzen, through which it turned to general standards governing contempt outside of bankruptcy in holding a creditor may not be found in contempt for its failure to comply with a discharge injunction when a fair ground of doubt exists as to whether the creditor’s actions are wrongful. 139 S. Ct. 1795, 1799–1804 (2019).
“The trustee shall . . . appear and be heard at . . . any hearing that concerns . . . the value of property . . . confirmation of a plan . . . sale of property.” § 1183(b)(3) (emphasis added).
In every Subchapter V case, the trustee has a statutory duty to “appear and be heard” on certain issues. Often, a trustee can satisfy such duty, on many issues, by participating in a hearing and expressing a verbal opinion on the matter that’s before the Bankruptcy Court.
In a 2021 chapter 15 decision, In re Bankruptcy Estate of Norske Skogindustrier ASA,1 the United States Bankruptcy Court for the Southern District of New York held that foreign law avoidance claims that are sufficiently analogous to claims under section 548(a)(1)(A)2 of the Bankruptcy Code—but not identical—may fall within the intentional fraud exception to the safe harbor provisions of section 546(e)3 of the Bankruptcy Code (the “Safe Harbor”).
Question: What gets an attorney’s fee application allowed—or rejected—in bankruptcy?
Short answer: The services, (i) must be “necessary,” and (ii) must require legal expertise.
Two Recent Opinions
Two recent opinions address this question:
“Subchapter V is supposed to be a fast process toward plan confirmation, but I don’t see that happening!”
–Comment of a Bankruptcy Judge (as I recall the comment)
It’s true: (i) Subchapter V is supposed to go quickly, but (ii) it often doesn’t.
Here’s why it doesn’t: debtor attorneys often fail to push their cases forward.
Illustration
A bankruptcy court opinion, in a Subchapter V case, illustrates the problem.
On March 14, 2022, the United States Court of Appeals for the Fifth Circuit (the “Fifth Circuit”) revisited the issue of the rejection of filed-rate contracts in bankruptcy where such contracts are governed by the Federal Energy Regulatory Commission (“FERC”). The ruling marks the first time the Fifth Circuit has addressed this issue since its 2004 decision in In re Mirant Corp.1 In Federal Energy Regulatory Commission v.
Last week this author delved into what has become known as the “Texas Two-Step,” the arguments for and against its permissibility and the broader implications for the bankruptcy system.