Kyle Arendsen

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Texas Bankruptcy Court Declines to Deem Nonvotes as Votes in Favor of Plan (US)

As seen in the recent proliferation of bankruptcy cases seeking a structured dismissal or conversion after a successful sale, debtors constantly seek creative and efficient ways to wind up a case, including through a traditional plan of liquidation.  Yet, as discussed below, debtors must ensure that any proposed voting procedures for a plan comply with … Continue Reading

Mallinckrodt Trust Asserts Novel Argument in Response to Safe Harbor Defense (US)

A common defense to a fraudulent transfer claim in bankruptcy concerning a securities transaction is the “safe harbor” defense under section 546(e) of the Bankruptcy Code.  In a unique twist, a post-confirmation trust in Delaware recently argued that the safe harbor defense should not be available if the underlying transaction was illegal under the law … Continue Reading

Three Arrows Capital Co-Founder Avoids Contempt and Sanctions in United States, But Bankruptcy Court Previews Worldwide Enforcement Options

On June 27, 2022, Three Arrows Capital (“3AC”), a crypto hedge fund, commenced liquidation proceedings in the British Virgin Islands and thereafter filed recognition proceedings in, among other countries, the United States and Singapore.  As we discussed earlier this year, on December 2, 2022, the bankruptcy court presiding over 3AC’s chapter 15 proceeding pending in … Continue Reading

Delaware Bankruptcy Court Approves DIP Financing of 700 Bitcoin

On May 8, 2023, online cryptocurrency exchange platform Bittrex, Inc. and three of its affiliated entities (collectively “Bittrex”) filed for chapter 11 to wind down their U.S. and long-dormant Malta operations.  The bankruptcy filing followed costly regulatory investigations and an April 17, 2023 SEC enforcement action alleging that Bittrex improperly sold crypto assets that were … Continue Reading

Bankruptcy Court Dismisses Cannabis Company Employee’s Chapter 13 Case

Last month, the United States Bankruptcy Court for the District of Massachusetts denied confirmation of a cannabis company employee’s Chapter 13 plan and dismissed his bankruptcy case.  The employee, Scott H. Blumsack (the “Debtor”), is a general manager who is licensed in Massachusetts to work for Society Cannabis Co., a Massachusetts-licensed retailer, wholesaler, and producer … Continue Reading

Bankruptcy Court Allows Service of a Subpoena Via Twitter

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 … Continue Reading

Claims Agents Beware:  Business Arrangement With Claims-Trading Platform Raises Court’s Concern

Online claims-trading platform Xclaim Inc. came under scrutiny this past summer in the Madison Square Boys & Girls Club Inc. bankruptcy case pending in the United States Bankruptcy Court for the Southern District of New York.  Since at least 2019, Xclaim has executed agreements with at least five notice and claims agent firms to synchronize … Continue Reading

In re PWM Property Management: Creditors’ and Equity Holder’s Attempt to File and Solicit Competing Plan During Exclusivity Period Denied

What options does a creditor have when they are frustrated with how a debtor is conducting its chapter 11 bankruptcy case?  In In re PWM Property Management LLC, the Delaware bankruptcy court denied a motion by creditors and interest holders to file a proposed plan of reorganization as an exhibit to their opposition to the … Continue Reading

Limetree Bay: Messy Auction Process Generates Increased Recoveries

Can messy be good?  Sometimes the answer is yes.  The chapter 11 case filed by Limetree Bay Services, LLC and five of its affiliates (“Limetree Bay”) is one example of auction disorder actually bringing increased creditor recoveries. Bankruptcy professionals, financially distressed companies and acquirers of distressed assets can learn valuable lessons from this odd bankruptcy … Continue Reading

Congress Proposes Significant Bankruptcy Code Changes to Protect Tort Claimants and Creditors

Two controversial mechanisms are available in many circuits to assist parties in a chapter 11 case to reach a global resolution and obtain plan confirmation:  non-consensual third-party releases and preliminary stays against third-party litigation.  On July 28, 2021, the House Committee on the Judiciary Subcommittee on Antitrust, Commercial and Administrative Law announced proposed legislation, the … Continue Reading

You Shall Not Pass – Bankruptcy Court in Intelsat Grants Debtors’ Motion to Seal Hearing

On April 19, 2021, the United States Bankruptcy Court for the Eastern District of Virginia granted a motion (the “Seal Motion”) filed by the Intelsat S.A. debtors (the “Debtors”) to seal the hearing on the Debtors’ motion to extend exclusivity and motion to compel plan mediation.  Although bankruptcy courts routinely grant motions to seal content … Continue Reading

No Right, No Power, No Claim: Anti-Assignment Provision Voids Claim Trader’s Proof of Claim

On September 11, 2019, the Delaware district court affirmed the bankruptcy court’s decision to expunge a proof of claim filed by a claims trader in the Woodbridge Group of Companies, LLC bankruptcy case.  The court’s holding was based on three primary legal conclusions:  (1) the anti‑assignment provisions in the underlying loan agreements and promissory notes were … Continue Reading

Small Business Reorganization Act Signed Into Law—A New Frontier for Small Business Bankruptcies

On August 26, 2019, President Trump signed the Small Business Reorganization Act (“SBRA”)  into law.  The SBRA is scheduled to take effect on February 22, 2020.  As we previously reported, the SBRA offers small businesses with aggregate liabilities that do not exceed $2,725,625 the opportunity to resolve their outstanding debts through a condensed and price‑conscious … Continue Reading

Section 363(o) Implications: Bankruptcy Court Denies Debtor’s Request to Disband Consumer Creditors’ Committee

On May 17, 2019, the Bankruptcy Court for the Southern District of New York announced that the Official Committee of Consumer Creditors (the “Consumer Committee”) appointed in the In re Ditech Holding Corp. bankruptcy case would not be disbanded.  Ditech, supported by the ad hoc group of term loan lenders (the “Ad Hoc Group”), had … Continue Reading

The Small Business Reorganization Act Reintroduced: A Way Forward for Small Business Reorganization?

Last month, Congress reintroduced the Small Business Reorganization Act (“SBRA”), under which a new subchapter V would be added to chapter 11 of the United States Bankruptcy Code.  This new subchapter would provide small businesses with aggregate liabilities that do not exceed $2,566,050 with an opportunity to resolve outstanding liabilities through a streamlined and cost‑effective … Continue Reading
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