Business Restructuring Review | March–April 2020

In This Issue:

U.S. Supreme Court: Creditors May Immediately Appeal Denials of Automatic-Stay Relief

On January 14, 2020, the U.S. Supreme Court held in Ritzen Group, Inc. v. Jackson Masonry, LLC, 589 U.S. __, 2020 WL 201023 (Jan. 14, 2020), that bankruptcy court orders conclusively denying relief from the automatic stay are appealable. The decision provides important guidance to bankruptcy courts, practitioners, and parties on the oft-recurring issues of taking and preserving bankruptcy appeals. [read more …]

Turf War Update: Sixth Circuit Weighs In on Dispute Between Bankruptcy Courts and FERC Over Rejection of Power Contracts

In FERC v. FirstEnergy Solutions Corp. (In re FirstEnergy Solutions Corp.), 945 F.3d 431 (6th Cir. 2019), a divided panel of the Sixth Circuit ruled that, although the bankruptcy court had "concurrent" jurisdiction to decide whether chapter 11 debtors could reject certain FERC-regulated wholesale power contracts, the bankruptcy court exceeded its jurisdiction by enjoining FERC from requiring the debtors to continue performing under the contracts or from taking any other actions in connection with them. The Sixth Circuit also held that the bankruptcy court incorrectly applied the "business-judgment" standard to the debtors' request to reject the contracts. [read more …]

Post-Merit, the Second Circuit Reaffirms Its Ruling That State Law Avoidance Claims Are Preempted by the Section 546(e) Safe Harbor

In In re Tribune Co. Fraudulent Conveyance Litig., 946 F.3d 66 (2d Cir. 2019), the U.S. Court of Appeals for the Second Circuit reaffirmed, notwithstanding the U.S. Supreme Court's ruling in Merit Mgmt. Grp., LP v. FTI Consulting, Inc., 138 S. Ct. 883, 200 L. Ed. 2d 183 (2018), its 2016 decision that creditors' state law fraudulent transfer claims arising from the 2007 leveraged buyout ("LBO") of Tribune Co. were preempted by the safe harbor for certain securities, commodities, or forward contract payments set forth in section 546(e) of the Bankruptcy Code. The Second Circuit concluded that a debtor may itself qualify as a "financial institution" covered by the safe harbor, and thus avoid the implications of Merit, by retaining a bank or trust company as an agent to handle LBO payments, redemptions, and cancellations. [read more …]

Uniform Voidable Transactions Act Adopted in New York

On July 16, 2014, the Uniform Law Commission approved a series of amendments to the Uniform Fraudulent Transfer Act (the "UFTA"), which at that time was in force in 43 states (all states except Alaska, Kentucky, Louisiana, Maryland, New York, South Carolina, and Virginia). The revised model legislation, which has been enacted by 21 states (and introduced in four others), is now called the "Uniform Voidable Transactions Act" (the "UVTA"). New York State, which for 95 years had refrained from adopting the UFTA in favor of the Uniform Fraudulent Conveyance Act, formally adopted the UVTA on December 6, 2019. The effective date of the New York UVTA is April 4, 2020. [read more …]

In Millennium, the Third Circuit Gives Nonconsensual Third-Party Releases in a Chapter 11 Plan a Stern Look

In In re Millennium Lab Holdings II, LLC, 945 F.3d 126 (3d Cir. 2019), the U.S. Court of Appeals for the Third Circuit upheld a bankruptcy court decision confirming a chapter 11 plan containing nonconsensual third-party releases. The Third Circuit has not yet given such releases its wholesale approval—this opinion simply held that the bankruptcy court's order confirming the plan did not violate Article III of the U.S. Constitution. In fact, the Third Circuit made sure to emphasize the limited nature of its holding. With this ruling, however, the Third Circuit has finally weighed in on an important—although rarely discussed—aspect of the nonconsensual third-party release framework. [read more …]


Heather Lennox (Cleveland and New York), Ben Larkin (London), Bruce Bennett (Los Angeles and New York), and Corinne Ball (New York) have been recommended as "Leaders in Their Field" in the area of "Restructuring/Insolvency" or "Bankruptcy/Restructuring" by Chambers Global 2020.

An article written by Corinne Ball (New York) titled "Seventh Circuit Holds Interim DIP Financing Order Is Enforceable and Prior to Reclamation Claims Under § 546(c)" was published in the February 26, 2020, edition of the New York Law Journal.

An article written by Brad B. Erens (Chicago) and Mark G. Douglas (New York) titled "Chapter 11 Plan Distributions Are Not Collateral Covered by Intercreditor Agreement's Waterfall Provision" was posted on the January 28, 2020, Harvard Law School Bankruptcy Roundtable.

An article written by Brad B. Erens (Chicago) and Mark G. Douglas (New York) titled "Private Equity Update: 1st Circuit Reverses Imposition of Pension Plan Withdrawal Liability" was published by Lexis Practice Advisor on January 22, 2020.

An article written by Paul M. Green (Houston) and Mark G. Douglas (New York) titled "Oil and Gas Industry Update—Sabine Oil Not the Last Word on Treatment of Gathering Agreements in Bankruptcy" was published by Lexis Practice Advisor on January 22, 2020.

An article written by Dan T. Moss (Washington) and Mark G. Douglas (New York) titled "Chapter 15 Gap Period Relief Subject to Preliminary Injunction Standard But No Adversary Proceeding Required" was published in the January 2020 INSOL International News Update.

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