Business Restructuring Review

In this issue:

  • From the Top: Supreme Court “Bright-Line” Ruling on Scope of Chapter 11 Transfer Tax Exemption Bad News for Pre-Confirmation Asset Sales in Bankruptcy
    In its only ruling in bankruptcy so far this year, the U.S. Supreme Court ruled that pre-confirmation asset transfers under section 363(b) cannot qualify for chapter 11’s transfer tax exemption. 
  • Newsworthy 
  • Bear Stearns Redux: Ruling Denying Chapter 15 Recognition to Cayman Islands Hedge Funds Upheld on Appeal
    Affirmance on appeal of a bankruptcy court order denying chapter 15 recognition is more bad news for offshore hedge funds that carry on a significant volume of business in the U.S. but are organized as “letter box” companies in foreign jurisdictions.
  • Collateral Surcharge Denied Despite Inadequacy of Carve-Out Due to Express Waiver in DIP Financing Agreement
    In a matter of apparent first impression, the Ninth Circuit held that professional fees incurred by a chapter 11 debtor could not be paid from its lender’s collateral because the debtor waived its right to seek a section 506(c) surcharge and failed to negotiate an adequate carve-out. 
  • Can an Executory Contract Lose Its Executoriness? “Maybe,” Says the Second Circuit
    The Second Circuit ruled that post-petition completion of performance by a nondebtor party to a contract that was executory as of the chapter 11 petition date cannot strip the debtor of the right to assume or reject the contract.
  • Seller Beware: Yet Another Cautionary Tale for Distressed
    Debt Traders - A New York bankruptcy court recently took a hard look at the standard transfer forms and definitions to determine whether a seller’s reimbursement rights were transferred along with the debt.
  • Failure of Creditor Class to Cast Vote on Chapter 11 Plan Does Not Equate to Acceptance
    An Illinois district court ruled that classes of impaired creditors that fail to cast ballots either accepting or rejecting a plan are not deemed to have accepted the plan for purposes of confirmation.
  • In Brief: Good-Faith Chapter 11 Filing Determination Defeats Fiduciary Duty Breach Claim
    The Delaware Chancery Court held that claims for breach of fiduciary duty must be dismissed because a bankruptcy court’s good-faith chapter 11 filing determination “precludes a finding that the Company’s directors violated their fiduciary duties by filing for bankruptcy.