In our latest insight we look back at the key restructuring cases and events from last year in the United States, Asia-Pacific, and Australia and consider the outlook in 2024 for restructuring transactions as a whole. This insight provides an overview of the US banking crisis involving Silicon Valley Bank and Signature Bank, the … Continue Reading
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
In March 2022, the International Monetary Fund (the “IMF”) assessed Sri Lanka’s public debt to be unsustainable after the country entered the pandemic with thin reserve buffers, high debt levels, and no fiscal space. The IMF’s determination prompted Sri Lanka to begin restructuring its debt the following month. As part of that process, Sri Lanka … Continue Reading
A consensual resolution among all stakeholders is an important goal of any bankruptcy proceeding. But how can parties reach a consensual deal if financing is drying up quickly and the prospect of confirming a plan is grim? That was the issue facing the Rockport debtors (the “Debtors”) in their Delaware bankruptcy cases styled In re … Continue Reading
Who owns cryptocurrency held by a cryptocurrency exchange? Do the cryptocurrency assets belong to the customers who deposited the crypto with the exchange, or do the cryptocurrency assets belong to the exchange itself? The answer to this question will have huge significance, both in terms of creditor recoveries as well as preferential transfer liability exposure. … Continue Reading
Our recent insight provides a comparative summary of the insolvency procedures that are available in the United Arab Emirates (UAE), the Kingdom of Saudi Arabia (KSA), England and Wales, and the US. It compares which debtor-in-possession, office-holder and terminal procedures are available in each of those jurisdictions, as well as considering the extent to which the … Continue Reading
The overwhelming majority of my practice has involved larger, complex Chapter 11 cases and out-of-court restructurings, representing debtors, Chapter 11 trustees, committees, or creditors. However, with the expansion during Covid of the Subchapter V debt limit to $7.5 million, I have found myself participating in multiple Subchapter V cases as counsel to creditors. I discovered … Continue Reading
In this second part of our blog exploring the various issues courts need to address in applying the Bankruptcy Code to cryptocurrency, we expand upon our roadmap. In part one, we addressed whether cryptocurrency constitutes property of the estate, the impacts of cryptocurrency’s fluctuating valuation, issues of perfection, and the effects of cryptocurrency on debtor-in-possession … Continue Reading
Many authorities and commentators have considered cryptocurrencies, and the blockchains that undergird them, as a potentially disruptive force in the financial industry. Now, that disruption has made its way to a different side of finance—bankruptcy, and during the past year, the United States bankruptcy courts have had to confront many unexpected challenges involved in dealing … Continue Reading
In a scholarly, comprehensive and lengthy opinion written by one of the Southern District of New York’s most recently appointed Bankruptcy Judges, the issue of whether the reinstatement of defaulted and accelerated debt requires the payment of default-rate interest and fees was answered in the affirmative, undoubtedly to the delight of lenders everywhere. … Continue Reading
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
How close is too close? The answer to this question can have dire implications for people and companies involved in the cannabis industry who wish to seek bankruptcy protection. Last month, a United States District Court issued an opinion which, while it did not directly answer this question, rejected a “zero tolerance” cannabis policy and … Continue Reading
When a debtor receives a bankruptcy discharge, section 524(a) of the U.S. Bankruptcy Code prohibits a creditor from seeking to collect a prepetition debt against the discharged debtor or its property. Importantly, the discharge does not extinguish the debt—it merely limits recourse against the discharged debtor. Section 524(e), however, provides that the discharge does not … Continue Reading
The confluence of the COVID-19 pandemic, high inflation, and increased borrowing costs culminated in countries incurring record levels of debt.[1] Despite this global debt crisis, there is currently no comprehensive set of rules or body of law to govern the restructuring of sovereign debt. Instead, when a sovereign restructures its debt, it is usually guided … Continue Reading
The first half of 2023 witnessed the failure of three financial institutions in quick succession—Silicon Valley Bank (March 10, 2023), Signature Bank (March 12, 2023), and First Republic Bank (May 1, 2023). This was the first time three financial institutions failed in such a compressed time period since the Great Recession of 2008. The failure … Continue Reading
The increase in bankruptcy filings that restructuring professionals have been expecting is now arriving. With rising inflation, increased interest rates, tightening credit markets, labor shortages and supply chain disruptions, we are starting to see a dramatic increase in filings. Last week the American Bankruptcy Institute noted that commercial Chapter 11 filings increased 105% in May … Continue Reading
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
On April 19, 2023 the Supreme Court issued its unanimous ruling in MOAC Mall Holdings LLC v. Transform Holdco LLC, 528 U.S ____ (2023), holding that the limitations contained in section 363(m) of the United States Bankruptcy Code are not jurisdictional. The Supreme Court’s ruling not only resolved a split amongst the circuits, but it … Continue Reading
In January, we wrote about Highland Capital Management, L.P. and the reorganized debtor’s filing of a petition for a writ of certiorari, by which the reorganized debtor asked the Supreme Court to consider whether section 524(e) of the Bankruptcy Code prohibits non-debtor exculpations. Now for something completely different. Earlier this month, the Bankruptcy Court for the … Continue Reading
A recent order from the United States Bankruptcy Court for the Southern District of New York puts to test the theory that “it is better to ask for forgiveness than permission.” After a lengthy dispute in the bankruptcy cases of Arcapita Bank B.S.C.(c) and its affiliates (the “Debtors”), the court held Bahrain Islamic Bank (“BisB”) … Continue Reading
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
Are bankruptcy doors now opening for cannabis companies? A decision last week from a California bankruptcy court indicates perhaps so, at least for cannabis companies that are no longer operating. Factual Background The Hacienda Company, LLC (the “Debtor”) was in the business of wholesale manufacturing and packaging cannabis products. After it ceased operations in February … Continue Reading
Last November we wrote about the Fifth Circuit Court of Appeals’ decision in Highland Capital Management, L.P., where the court reversed the bankruptcy court’s approval of a plan’s exculpation clause for non-debtors and limited the universe of parties covered by that provision. Relying on Bank of New York Trust Co., NA v. Official Unsecured Creditors’ … Continue Reading
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