Subchapter V bankruptcy cases have exploded in popularity, primarily due to its high rate of obtaining confirmed plans, significantly lower costs, faster pace, and ability for debtors to retain the equity in their businesses. But some bankruptcy courts and circuit courts have begun expanding exceptions for debts that Subchapter V debtors cannot discharge. Recently, former … Continue Reading
The Supreme Court recently issued its long-awaited decision in Harrington v. Purdue Pharma L.P., 144 S.Ct. 2071 (U.S. 2024) (“Purdue Pharma”), addressing whether nonconsensual third-party releases are permissible under the Bankruptcy Code. In a 5-4 decision, the Court ruled that nonconsensual third-party releases are not permitted under the Bankruptcy Code. Notably, however, the Supreme Court … Continue Reading
The bankruptcy court presiding over the FTX Trading bankruptcy last month issued a memorandum opinion addressing valuation of cryptocurrency-based claims and how to “calculate a reasonable discount to be applied to the Petition Date market price” for certain cryptocurrency tokens. As noted in Bankruptcy Judge John Dorsey’s opinion, “[n]o bankruptcy court has ever estimated the … Continue Reading
File your proof of claim before the bar date. That’s a principle every creditor in a bankruptcy case should adhere by. But on June 7, 2024, the United States Bankruptcy Court for the Southern District of New York may have increased the degree of diligence parties need to conduct to determine whether they are a … Continue Reading
On June 27, 2024, the Supreme Court ruled in a 5-4 decision that a bankruptcy court does not have the statutory authority to discharge creditors’ claims against a non-debtor without the creditors’ consent (except in asbestos cases). The decision in Harrington v. Purdue Pharma settles a long-standing dispute in the bankruptcy world that will have … Continue Reading
This author—whose practice is heavily weighted toward representation of official committees in large chapter 11 cases—has previously penned articles relating to questions surrounding the permanency of an official committee. First, in an article entitled Does a Bankruptcy Court Have Authority to Disband an Official Committee?,[1] two then high-profile bankruptcy cases were examined—In re City of … Continue Reading
When a liquidating debtor seeks to assume a lease, one of the lessor’s immediate questions is who will be the assignee. But what happens when a liquidating debtor seeks to assume a lease and waits up to two years thereafter to determine who the assignee will be? Although peculiar, the analysis of whether to grant … Continue Reading
Last month the Delaware Chancery Court sent a clear message to Delaware companies that failure to strictly comply with the Delaware Assignment for the Benefit of Creditors (“ABC”) statute will result in severe consequences, including dismissal. On December 27, 2023, WMT (an ABC) LLC (the “Assignee”) filed an assignment petition which provided that it had … Continue Reading
In my most recent blog post, I provided some tips for creditors who find themselves in the Subchapter V arena. This is somewhat of a follow-up to that one. There is a general consensus that Subchapter V has been successful for debtors in smaller cases. The American Bankruptcy Institute recently commented that Subchapter V bankruptcies … Continue Reading
As discussed in our prior blog entitled “New York’s Sovereign Debt Restructuring Proposals,”[1] three bills were introduced in the New York state legislature to overhaul the way sovereign debt restructurings are handled in New York. Those bills sought to implement a comprehensive mechanism for restructuring sovereign debt, limit recovery on certain sovereign debt claims, and … Continue Reading
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
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
