Business Restructuring Review

Business Restructuring Review

Chapter 11 Plan Distributions Are Not Collateral Covered by Intercreditor Agreement's Waterfall Provision

In In re Energy Future Holdings Corp., 2019 WL 2535700 (3d Cir. June 19, 2019), a panel of the U.S. Court of Appeals for the Third Circuit ruled that adequate protection payments made during a bankruptcy case and distributions under a chapter 11 plan are not distributions of collateral for purposes of a "waterfall" provision in an intercreditor agreement. [read more …]

Bankruptcy Court Denies Creditor's Improper Discovery Request

In In re Cambridge Analytica LLC, 600 B.R. 750 (Bankr. S.D.N.Y. 2019), the court denied the motion of a creditor, who was a plaintiff in nonbankruptcy derivative litigation that did not involve the debtor, for an order under Bankruptcy Rule 2004 directing the debtor to provide discovery regarding its assets. According to the court, the creditor, who had purchased a nominal claim against the debtor and had not participated meaningfully in the bankruptcy case, sought discovery for the "improper purpose" of obtaining discovery in the derivative suit. Allowing such discovery, the court reasoned, would "set a very bad precedent." [read more …]

Three-Year Delay in Appointing Foreign Representative Not Fatal to Chapter 15 Recognition

In In re PT Bakrie Telecom Tbk, 601 B.R. 707 (Bankr. S.D.N.Y. 2019), the U.S. Bankruptcy Court for the Southern District of New York provided a primer on several important issues that a court may have to consider in ruling on a petition for recognition of a foreign bankruptcy proceeding under chapter 15 of the Bankruptcy Code. These include the requirement that a foreign debtor have property in the United States before being eligible for chapter 15, the rules regarding the appointment of a "foreign representative" for the debtor, what qualifies as a "collective proceeding" for the purpose of chapter 15 recognition, and the "public policy" exception to recognition. [read more …]

Presumption of Filed Claim's Validity and Amount Does Not Apply in Proceeding to Determine Secured Amount of Claim

In In re Bassett, 2019 WL 993302 (Bankr. E.D. Cal. Feb. 26, 2019), the U.S. Bankruptcy Court for the Eastern District of California broadened the divide in a long-simmering debate by holding that the Bankruptcy Code's presumption that a filed claim is valid does not create a presumption that the claim is secured to the extent specified in a proof of claim. [read more …]

Delaware Bankruptcy Court Adopts Interim Modalities for Court Communication in Cross-Border Bankruptcies

The U.S. Bankruptcy Court for the District of Delaware recently adopted, on an interim basis, the Modalities of Court-to-Court Communication, which were developed by the Judicial Insolvency Network to "apply to direct communications (written or oral) between courts in specific cases of cross-border proceedings relating to insolvency or adjustment of debt opened in more than one jurisdiction. It is anticipated that other courts will do so as well in the near term. [read more …]

Legislative Update

On August 23, 2019, President Trump signed into law four pieces of bankruptcy legislation designed to help financially distressed small businesses, disabled veterans, national guard and reservists, and family farmers. [read more …]

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