Insights

Business Restructuring Review | July – August 2018

In This Issue:

Due-on-Sale Clause Not Mandatory in Cramdown Chapter 11 Plan, and Plan Acceptance Requirement Applies on "Per Plan" Basis

In Grasslawn Lodging, LLC v. Transwest Resort Properties Inc. (In re Transwest Resort Properties, Inc.), 881 F.3d 724 (9th Cir. 2018), the U.S. Court of Appeals for the Ninth Circuit ruled that a "cramdown" chapter 11 plan need not provide a due-on-sale clause for an undersecured creditor who elects to be treated as fully secured under section 1111(b)(2) of the Bankruptcy Code and, as a matter of first impression among the circuits, that section 1129(a)(10)'s impaired class acceptance requirement applies on a "per plan" basis. [read more ... ]

Connecticut Bankruptcy Court Adds Fuel to the Fire in Debate Over Effect of Rejection of Trademark License

In In re SIMA Int'l, Inc., 2018 WL 2293705 (Bankr. D. Conn. May 17, 2018), the U.S. Bankruptcy Court for the District of Connecticut ruled that a chapter 7 trustee's rejection of an intellectual property license agreement did not deprive the licensee of the continuing right to use the licensed intellectual property, including a trademark, because the licensee made a timely election under section 365(n) of the Bankruptcy Code. [read more … ]

Bankruptcy Court Enforces Nonconsensual Third-Party Releases in Chapter 15 Case

In In re Avanti Commc'ns Grp. PLC, 582 B.R. 603 (Bankr. S.D.N.Y. 2018), Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York entered an order under chapter 15 of the Bankruptcy Code enforcing a scheme of arrangement sanctioned by a court in England that included nonconsensual third-party releases. Judge Glenn determined that such releases should be recognized and enforced consistent with principles of "comity" and cooperation with foreign courts inherent under chapter 15. [read more … ]

Bankruptcy Court Lacks Power to Substantively Consolidate Nondebtor, Nonprofit Entities With Archdiocese Debtor

In Official Committee of Unsecured Creditors v. Archdiocese of St. Paul and Minneapolis (In re Archdiocese of St. Paul and Minneapolis), 888 F.3d 944 (8th Cir. 2018), the U.S. Court of Appeals for the Eighth Circuit affirmed lower court rulings that the assets of parishes and other entities associated with an archdiocese were not, by means of "substantive consolidation," available to fund bankruptcy settlements with clergy sexual-abuse victims. According to the Eighth Circuit, a bankruptcy court's authority to issue "necessary or appropriate" orders does not permit it to order substantive consolidation of the assets and liabilities of a debtor archdiocese with the assets and liabilities of nondebtor entities that also operated as nonprofits because the remedy would contravene the prohibition of involuntary bankruptcy filings against nonprofits. [read more ... ]

From the Top in Brief: U.S. Supreme Court Clarifies Whether Debts Based on False Statements Can Be Discharged in Bankruptcy

On June 4, 2018, the U.S. Supreme Court ruled in Lamar, Archer & Cofrin, LLP v. Appling, No. 16-1215, 138 S. Ct. 1752, 2018 WL 2465174 (U.S. June 4, 2018), that an individual debtor's false statement about a single asset, as distinguished from the debtor's overall financial status, can make a debt for money, property, services, or credit obtained on the basis of the statement nondischargeable in the debtor's bankruptcy case, but only if the statement is in writing. [read more ... ]

Newsworthy:

Heather Lennox (Cleveland and New York), Sidney P. Levinson (New York), Kevyn D. Orr (Washington), Carl E. Black (Cleveland), Pedro A. Jimenez (Miami and New York), Scott J. Greenberg (New York)James O. Johnston (Los Angeles), Brad B. Erens (Chicago), Jeffrey B. Ellman (Atlanta), Corinne Ball (New York), Bruce Bennett (Los Angeles and New York), Charles M. Oellermann (Columbus), and Gregory M. Gordon (Dallas) were designated "Leaders in their Field" in the area of Bankruptcy/Restructuring in Chambers USA 2018.

Jones Day has been selected for the GRR 30 2018, a guide to the world's leading restructuring and insolvency practices that is compiled, written, and researched exclusively by independent Global Restructuring Review editorial staff.

Kevyn D. Orr (Washington) recently joined the board of directors of the Lincoln Institute of Land Policy, which seeks to improve quality of life through the effective use, taxation, and stewardship of land. A nonprofit private operating foundation whose origins date to 1946, the Lincoln Institute researches and recommends creative approaches to land as a solution to economic, social, and environmental challenges.

On May 17, 2018, Corinne Ball (New York) served as a panelist in a "TED Talk" discussion entitled "What I'd Change About the Corporate Bankruptcy System" at the VALCON 2018 conference, hosted jointly by the American Bankruptcy Institute and the Association of Insolvency & Restructuring Advisors in Las Vegas.

Bruce Bennett (Los Angeles and New York) was named a "Leading Lawyer" in the fields of "Finance—Restructuring (including bankruptcy): corporate" and "Finance—Restructuring (including bankruptcy): municipal" in The Legal 500 United States 2018.

Heather Lennox (Cleveland and New York) was named a "Leading Lawyer" in the field of "Finance—Restructuring (including bankruptcy): corporate" in The Legal 500 United States 2018.

Scott J. Greenberg (New York) was named a "Next Generation Lawyer" in the field of "Finance—Restructuring (including bankruptcy): corporate" in The Legal 500 United States 2018.

Joshua M. Mester (Los Angeles), Sidney P. Levinson (New York), and Kevyn D. Orr (Washington) were recommended in the field of "Finance—Restructuring (including bankruptcy): corporate" and/or "Finance—Restructuring (including bankruptcy): municipal" in The Legal 500 United States 2018.

Scott J. Greenberg (New York)Michael J. Cohen (New York), Nicholas J. Morin (New York), Anna Kordas (New York), and Rachel Biblo Block (Dallas) are part of Jones Day's team of professionals representing Rex Energy in connection with its pre-negotiated chapter 11 filing on May 18, 2018, in the U.S. Bankruptcy Court for the Western District of Pennsylvania.

An article written by Charles M. Oellermann (Columbus) and Mark G. Douglas (New York) entitled "Debate Intensifies as to Whether the Bankruptcy Code's Avoidance Provisions Apply Extraterritorially" was posted on the June 26, 2018, Harvard Law School Bankruptcy Roundtable.

Jones Day publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our "Contact Us" form, which can be found on our website at www.jonesday.com. The mailing of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The views set forth herein are the personal views of the authors and do not necessarily reflect those of the Firm.

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