Business Restructuring Review Vol. 24 No. 5 | September–October 2025
In This Issue
Breaking New Ground: Second Circuit Rules that Bankruptcy Code's Securities Transactions Safe Harbor Bars Foreign Common-Law Claims in Chapter 15 Case
In In re Fairfield Sentry Ltd., 2025 WL 2218836 (2d Cir. Aug. 5, 2025), the U.S. Court of Appeals for the Second Circuit reversed a lower court judgment in a chapter 15 case denying dismissal of common-law constructive trust claims asserted by the liquidators of a British Virgin Islands ("BVI") company against various non-U.S. recipients of more than $6 billion in redemption payments made as part of the Madoff Ponzi scheme. According to the Second Circuit: (i) the constructive trust claims arising under BVI law were barred by the Bankruptcy Code's safe harbor (section 546(e)) insulating certain securities contract payments from avoidance in the absence of actual fraud; and (ii) by expressly providing in the Bankruptcy Code that section 546(e) applies in chapter 15 cases, U.S. lawmakers intended that section 546(e) apply extraterritorially, thereby overcoming the presumption against extraterritoriality of U.S. laws. [read more …]
Gap Period Injunctive Relief Warranted in Chapter 15 Case Where Recognition of Canadian Receivership Likely Based on U.S. Debtors' Receivership Activities
In In re Giftcraft Ltd., 2025 WL 1583480 (Bankr. S.D.N.Y. June 4, 2025), the U.S. Bankruptcy Court for the Southern District of New York addressed a request for "gap period" injunctive relief in a chapter 15 case. The court granted a foreign representative's request for a temporary injunction preventing creditors from proceeding against the assets of three U.S.-incorporated companies that were part of a group of companies subject to the receivership. Among other things, the bankruptcy court concluded that the foreign representative was likely to succeed in obtaining chapter 15 recognition because, although incorporated in the United States, the U.S. companies' "center of main interest" was in Canada. The court also ruled that parties affected by the injunction were adequately protected because they could participate and seek appropriate redress in both the Canadian receivership and the chapter 15 case. [read more …]
Florida Bankruptcy Court: Proposed DIP Financing and Sale Framework for Administratively Insolvent Debtors Did Not Violate Jevic's Prohibition of Priority-Deviating Distributions
After the U.S. Supreme Court ruled in Czyzewski v. Jevic Holding Corp., 580 U.S. 451 (2017), that the Bankruptcy Code prohibits final distributions to creditors that deviate from the Bankruptcy Code's priority scheme as part of a "structured dismissal" of a chapter 11 case without the consent of affected senior creditors, courts have been called upon to determine whether the rationale of Jevic extends to other contexts, such as proposed settlements and bankruptcy asset sales. In In re Silver Airways, LLC, 2025 WL 1436258 (Bankr. S.D. Fla. May 19, 2025), the U.S. Bankruptcy Court for the Southern District of Florida approved the debtors' motion to incur debtor-in-possession ("DIP") financing and for approval of bidding procedures for an auction sale of assets, even though the estate was administratively insolvent. According to the bankruptcy court, because administrative creditors made an informed decision to support the financing and sale framework as the only possibility of obtaining partial recovery on their claims, the DIP financing and sale did not run afoul of Jevic. [read more …]
Third Circuit Largely Upholds Order Confirming Boy Scouts Chapter 11 Plan
Five years after it filed for bankruptcy protection in 2020 to deal with thousands of sexual abuse claims, the Boy Scouts of America reached a significant milestone when the U.S. Court of Appeals for the Third Circuit recently rejected the most significant challenges to the organization's chapter 11 plan, which established a trust to pay the claims of abuse victims. In In re Boy Scouts of Am., 137 F.4th 126 (3d Cir. 2025), reh'g denied, Nos. 23-1664 et al. (3d Cir. June 13, 2025), the court of appeals ruled that: (i) an appeal filed by abuse claimants of the order confirming the plan, which effectuated a global settlement involving the establishment of a trust to satisfy abuse claims and a buyback of insurance policies by insurers under section 363(b) of the Bankruptcy Code to fund the trust in exchange for a nonconsensual release of all liabilities, must be dismissed as "statutorily moot"; (ii) an appeal filed by certain nonsettling insurers seeking minor modifications to the plan was not statutorily moot because the relief sought would not materially impact the settlement and insurance policy buyback; (iii) the insurance policy buyback transaction approved under section 363(b) was not an impermissible sub rosa chapter 11 plan; (iv) the nonsettling insurers' appeal was not "equitably moot"; and (v) the plan had to be changed to ensure that certain nonsettling insurers' claims were paid in full because, otherwise, the plan violated the prohibition against nonconsensual third-party releases. [read more …]
Clarity in Singapore: How COMI Is Determined Under the UNCITRAL Model Law on Cross-Border Insolvency
In In Re Fullerton Capital Ltd [2025] SGCA 11, the Singapore Court of Appeal upheld a lower court's decision recognizing a British Virgin Islands ("BVI") liquidation proceeding as a foreign main proceeding under the UNCITRAL Model Law on Cross-Border Insolvency, as adopted by Singapore in the Insolvency, Restructuring and Dissolution Act 2018 (the "Model Law"). The Court of Appeal concluded the presumption under Article 16(3) of the Model Law—that a debtor's "centre of main interest" ("COMI") is at its registered office—must be the starting point of the analysis. The court clarified that this presumption can be rebutted only if the party challenging it proves, on a balance of probabilities, that another jurisdiction has a comparatively stronger connection to the debtor. The court also clarified that the relevant time for assessing COMI is the date of the recognition application, and that the actions of foreign representatives post-commencement may be relevant, depending on the circumstances. [read more …]
Delaware Bankruptcy Court Allows Trustee to Pursue Recovery of Fraudulent Transfers for the Sole Benefit of Subordinated Claimholders
In In re ONH AFC CS Investors, LLC, 2025 WL 1353850 (Bankr. D. Del. May 8, 2025), the U.S. Bankruptcy Court for the District of Delaware held that, although a bankruptcy trustee generally cannot seek to avoid fraudulent transfers for the benefit of equity holders, the Bankruptcy Code's subordination of certain claims of investors did not preclude the trustee from bringing fraudulent transfer actions for their benefit. [read more …]
Newsworthy
Jones Day was among the "Client Service 30" in BTI Consulting Group's annual survey of law firms providing superior client service. The Firm has been ranked among the BTI client service elite for 10 years running.
Corinne Ball (New York), Bruce Bennett (Los Angeles), Carl E. Black (Cleveland), Jeffrey B. Ellman (Atlanta), Gary L. Kaplan (Miami), Heather Lennox (Cleveland/New York), and Daniel J. Merrett (Atlanta) were recognized in the 2026 edition of Best Lawyers in America® in the practice area Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law; Litigation—Bankruptcy.
Brad B. Erens (Chicago), Gregory M. Gordon (Dallas), Dan T. Moss (Washington/New York), Kevyn D. Orr (Washington), T. Daniel Reynolds (Cleveland), and Thomas W. Wearsch (New York/Cleveland) were recognized in the 2026 edition of Best Lawyers in America® in the practice area Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law. Caitlin K. Cahow (Atlanta/Chicago) was recognized as "One to Watch" in the practice area Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law; Litigation—Bankruptcy. Ryan Sims (Washington) was recognized as "One to Watch" in the practice area Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law.
Fabienne Beuzit (Paris), Rodolphe Carrière (Paris), and Isabelle Maury (Paris) were recognized in the 2026 edition of The Best Lawyers in France™ in the practice area Insolvency and Reorganization Law.
Corinne Ball (New York) (Hall of Fame), Bruce Bennett (Los Angeles), Carl E. Black (Cleveland), Jeffrey B. Ellman (Atlanta), Brad B. Erens (Chicago), Gregory M. Gordon (Dallas), Heather Lennox (Cleveland/New York), Joshua M. Mester (Los Angeles), and Kevyn D. Orr (Washington) were included in the 2025 edition of Lawdragon 500 Leading Bankruptcy and Restructuring Lawyers.
An article written by Jeffrey B. Ellman (Atlanta) and Alexandra L. Wainwright (Cleveland) titled "New York Bankruptcy Court Adopts Realistic Possibility Standard for Free and Clear Sales Under 11 U.S.C § 363(f)(5)" was published on July 23, 2025, by Lexis Practical Guidance.
An article written by Genna Ghaul (New York) and Benjamin C. Sandberg (New York) titled "Avianca: Second Court Adopts Billing Date Approach to Timely Performance of Unexpired Commercial Personal Property Leases in Bankruptcy" was published on July 24, 2025, by Lexis Practical Guidance.
An article written by Dan B. Prieto (Dallas) titled "Fifth Circuit Reigns in Bankruptcy Court Gatekeeping in Chapter 11 Plans" was published on July 24, 2025, by Lexis Practical Guidance.
An article written by Daniel J. Merrett (Atlanta) titled "Purdue Prohibition of Nonconsensual Third-Party Chapter 11 Plan Releases Does Not Apply to Bankruptcy Asset Sales" was published on July 25, 2025, by Lexis Practical Guidance.
Heather Lennox (Cleveland/New York), Bruce Bennett (Los Angeles), Kevyn D. Orr (Washington), Gregory M. Gordon (Dallas), Carl E. Black (Cleveland), Daniel J. Merrett (Atlanta), Dan B. Prieto (Dallas), Corinne Ball (New York), Thomas M. Wearsch (New York/Cleveland), Brad B. Erens (Chicago), Jeffrey B. Ellman (Atlanta), Gary L. Kaplan (Miami), and Dan T. Moss (Washington/New York) were recognized as leading lawyers in the practice area Bankruptcy/Restructuring in the 2025 edition of Chambers USA. Heather Lennox and Gregory M. Gordon received a "Band 1" designation. Heather Lennox was also recognized as a "Star Individual," and Corinne Ball and Bruce Bennett were designated as "Senior Statespersons."
Lawyer Spotlight: Oliver Zeltner
Oliver Zeltner, a partner in Jones Day's Houston Office, advises corporate clients in insolvency, restructuring, distressed asset transactions, and bankruptcy across industries such as retail, energy, manufacturing, automotive, health care, aerospace, and finance. His experience includes chapter 11 cases and out-of-court restructurings, as well as mass tort matters and Detroit's historic municipal bankruptcy case. Oliver counsels on all aspects of bankruptcy, including distressed asset transactions, chapter 11 plan negotiations, fraudulent conveyance, and fiduciary duty actions, automatic stay issues, environmental liability, cash collateral, and post-petition financing.
Clients include debtors and potential debtors, sellers and purchasers of distressed assets, secured creditors, critical vendors, vendors and customers of distressed counterparties, parents of insolvent subsidiaries, and avoidance action defendants. Notable representations include Boeing, American Greetings, the Cleveland Guardians, CITGO, Goodyear, and a local council of the Boy Scouts of America. He also represented Alpha Natural Resources, the Old Carco (Chrysler) Liquidation Trust, Peabody Energy Corporation, and Westmoreland Resource Partners.
In addition, he has been a guest lecturer at Harvard Business School and the University of Michigan Law School. He is a member of the Houston Bar Association and the Turnaround Management Association, Houston Chapter.
