Business Restructuring Review | May–June 2021

In This Issue:

First Impressions: Third Circuit Scuttles Triangular Setoff in Bankruptcy

In In re Orexigen Therapeutics, Inc., 990 F.3d 748 (3d Cir. 2021), the U.S. Court of Appeals for the Third Circuit ruled as a matter of first impression that "triangular setoff" does not satisfy the Bankruptcy Code's "mutuality" requirement. [read more …]

Should Equitable Mootness Bar Appeals Only of Chapter 11 Plan Confirmation Orders?

As demonstrated by a ruling recently handed down by the U.S. District Court for the Northern District of Texas, courts disagree on whether equitable mootness should apply only to appeals of plan confirmation orders. In Harden Healthcare LLC v. OLP Wyoming Springs LLC (In re Senior Care Centers, LLC), 2021 WL 632779 (N.D. Tex. Feb. 18, 2021), the district court affirmed a bankruptcy court order approving a settlement reached in connection with a sale transaction. In so ruling, the court held that the appeal was neither equitably nor statutorily moot, noting that, according to Fifth Circuit precedent, equitable mootness should not be expanded into such a "new frontier." [read more …]

Debate Intensifies on Substantial Contribution Claims in Chapter 7 Cases

In In re Concepts Am., Inc., 625 B.R. 881 (Bankr. N.D. Ill. 2021), the U.S. Bankruptcy Court for the Northern District of Illinois ruled that "[t]he plain and unambiguous language of § 503(b)(3)(D) [of the Bankruptcy Code] is conclusive—substantial contribution claims are allowed as administrative expenses only in Chapters 9 and 11, not in Chapter 7." [read more …]

Bankruptcy Court Recharacterizes Purported Loan as Equity

In In re Live Primary, LLC, 2021 WL 772248 (Bankr. S.D.N.Y. Mar. 1, 2021), the U.S. Bankruptcy court for the Southern District of New York held that a purported loan made to a startup limited liability company by one of its members should be treated as a capital contribution because, among other things, the company was inadequately capitalized and the unsecured "loan" was not properly documented, bore a de minimis interest rate, and was repayable only upon the occurrence of a stock offering or a change of control. [read more …]

In Brief: "Failing" Delaware Corporation Can Transfer Assets to Creditors in Lieu of Foreclosure Without Shareholder Consent

In Stream TV Networks, Inc. v. SeeCubic, Inc., 2020 WL 7230419 (Del. Ch. Dec. 8, 2020), the Delaware Court of Chancery held that the assets of Stream TV Networks, Inc., an insolvent Delaware-incorporated 3-D television technology company, could be transferred to an affiliate of two of Stream's secured creditors in lieu of foreclosure without seeking the approval of Stream's shareholders under section 271 of the General Corporation Law of Delaware or Stream's certificate of incorporation. [read more …]

U.S. Supreme Court Declines Review of Landmark Tribune Safe Harbor Ruling

On April 19, 2021, the U.S. Supreme Court declined to hear the appeal of a landmark 2019 decision issued by the U.S. Court of Appeals for the Second Circuit regarding the applicability of the Bankruptcy Code's safe harbor for certain securities, commodity, or forward contract payments to prevent the avoidance in bankruptcy of $8.3 billion in payments made to the shareholders of Tribune Co. as part of its 2007 leveraged buyout. [read more …]


Jones Day was ranked #1 in The BTI Consulting Group's 2021 Client Service A-Team report for the fifth consecutive year and the 13th time since BTI has been publishing its results, based on independent research.

Bruce Bennett (Los Angeles and New York) was featured in the new book The Caesars Palace Coup: How a Billionaire Brawl Over the Famous Casino Exposed the Power and Greed of Wall Street (Diversion Books, March 2021) for his role representing second-lien bondholders in the 2016 bankruptcy cases of gaming and hotel giant Caesars Entertainment.

Corinne Ball (New York) was interviewed in a March 17, 2021, Turnaround Management Association podcast titled "Interview with a Turnaround Legend: Past, Present and Future of Bankruptcy Law."

Bruce Bennett (Los Angeles and New York), Heather Lennox (Cleveland and New York), and Ben Larkin (London) were ranked in the practice areas of Bankruptcy/Restructuring or Restructuring/Insolvency in Chambers Global 2021.

An article written by Corinne Ball (New York) titled "The 'Two Hats' Doctrine for Shared Directors and Officers Falters When Assessing Waiver of Attorney-Client Privilege Suggesting Caution on Sharing Legal Advice" was published in the April 21, 2021, issue of The New York Law Journal.

An article written by Bruce Bennett (Los Angeles and New York), Heather Lennox (Cleveland and New York), Christopher DiPompeo (Washington), and Dan. T. Moss (Washington) titled "Supreme Court: Mere Retention of Property Does Not Violate Automatic Stay" was published on April 9, 2021, in the International Law Office Newsletter.

Corinne Ball (New York) was among the "Senior Statespeople" recognized in the field of Bankruptcy/Restructuring in Chambers Global 2021.

An article written by Dan T. Moss (Washington) and Mark G. Douglas (New York) titled "Second Circuit: Madoff Ponzi Scheme Customers Did Not Receive Fictitious Profit Payments 'For Value'" was published in the March 2021 issue of The Wall Street Lawyer.

Roger Dobson (Sydney), Katie Higgins (Sydney), Tim L'Estrange (Melbourne), and Lucas Wilk (Perth) were recognized in the field of Insolvency and Reorganization Law in the 2022 edition of The Best Lawyers in Australia.™ Roger Dobson (Sydney) was also named a "lawyer of the year" for 2022 in the practice area of Distressed Investing and Debt Trading.

An article written by Charles M. Oellermann (Columbus) and Mark G. Douglas (New York) titled "The Year in Bankruptcy: 2020" was published on March 12, 2021, in the International Law Office Newsletter.

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