Business Restructuring Review Vol. 24 No. 3 | May–June 2025
In This Issue
U.S. Supreme Court Rules that Bankruptcy Code Provides Only Limited Abrogation of Sovereign Immunity to Avoidance Actions
In U.S. v. Miller, No. 23-824, 2025 WL 906502 (U.S. Mar. 26, 2025), the U.S. Supreme Court resolved a circuit split on whether the Bankruptcy Code abrogates sovereign immunity for governmental units in avoidance litigation commenced by a bankruptcy trustee under applicable non-bankruptcy law by stepping into the shoes of a "triggering" creditor. The Court ruled that the abrogation of sovereign immunity in section 106(a) the Bankruptcy Code applies to avoidance claims under section 544(b), but not to state law claims that could otherwise be invoked by triggering creditors under applicable non-bankruptcy law. According to the 8–1 majority, section 106(a)'s text, context, and structure clearly indicate that the provision does not modify section 544(b)'s substantive requirements, which tie a bankruptcy trustee's rights to the rights of an actual creditor under "applicable law." In short, the majority concluded, if no creditor could assert a cause of action against the IRS under applicable non-bankruptcy law due to the government's sovereign immunity, a bankruptcy trustee is similarly constrained by that defense. [read more …]
New York Bankruptcy Court Recognizes English Scheme of Arrangement Proceeding Under Chapter 15 Despite Concerns of Improper COMI Manipulation
In In re Mega Newco, Ltd., No. 24-12031 (MEW), 2025 WL 601463 (Bankr. S.D.N.Y. Feb. 24, 2025), the U.S. Bankruptcy Court for the Southern District of New York granted chapter 15 recognition of a UK "scheme of arrangement" proceeding commenced on behalf of a newly formed subsidiary of a Mexican company for the purpose of restructuring the parent company's U.S. law-governed debt. The court also recognized and enforced a UK court's order approving the debtor's scheme, which included releases and injunctions of litigation against various non-debtor third parties. However, Judge Wiles noted that he would have had "serious questions" as to whether the debtor's scheme should be recognized under chapter 15 had there been evidence that the restructuring "structure" had been opposed, unfair, or thwarted creditor expectations. [read more …]
Disappointed Bidder in Bankruptcy Asset Sale Orders Waived Argument that Buyers Did Not Act in Good Faith by First Raising It on Appeal
In Clearview Eastern Fund LLC v. Woodward (In re Human Housing Henrietta Hyatt LLC), 666 B.R. 332 (B.A.P. 6th Cir. 2025), a Bankruptcy Appellate Panel ("BAP") for the Sixth Circuit examined the scope of section 363(m) of the Bankruptcy Code, which prohibits reversal or modification on appeal of an order authorizing a sale or lease to a "good-faith" purchaser unless the party challenging the sale obtains a stay pending appeal. The BAP ruled that an appeal of an asset sale order by disappointed bidders was moot under section 363(m) because the bidders did not obtain a stay pending appeal and waived any challenge to the good faith of the purchasers by failing to raise the issue before the bankruptcy court. The panel also held that the existence of a competing bidder is not an "adverse interest" that can defeat a buyer's good faith in connection with a sale. [read more …]
Chapter 11 Filing Without Consent of Independent Director Dismissed as Unauthorized
In In re 301 W N. Ave., LLC, 666 B.R. 583 (Bankr. N.D. Ill. 2025), appeal filed, No. 24 B 2741 (Bankr. N.D. Ill. Jan. 16, 2025), the U.S. Bankruptcy Court for the Northern District of Illinois granted a lender's motion to dismiss a chapter 11 filing by a special purpose limited liability company ("LLC") because an independent director appointed by an agent of the lender did not consent to the filing, as was required in the loan agreement and the debtor's LLC agreement. According to the court, the requirement for the director's consent to a bankruptcy filing violated neither federal public policy nor applicable non-bankruptcy law because the director had explicit fiduciary duties to the debtor and its creditors. [read more …]
Delaware Bankruptcy Court: Applying Credit Pressure on Financially Distressed Debtor Scuttles Ordinary Course Payment Preference Defense
In In re Fred's Inc., No. 19-11984 (CTG), 2025 WL 208536 (Bankr. D. Del. Jan. 15, 2025), the U.S. Bankruptcy Court for the District of Delaware granted partial summary judgment to a liquidating trustee in preference litigation. The court ruled that "ordinary business terms" within the meaning of section 547(c)(2)(B) of the Bankruptcy Code's ordinary course payment preference defense should be assessed in accordance with the "healthy debtor" standard rather than based upon customary industry practice tightening credit terms for financially distressed entities. Because the creditor/transferee applied "credit pressure" to the debtor once it became financially distressed, the court ruled that the creditor could not rely on the ordinary course payment defense. [read more …]
Newsworthy
Heather Lennox (Cleveland and New York), Bruce Bennett (Los Angeles), Corinne Ball (New York), and Ben Larkin (London) were ranked by Chambers Global 2025 in the field of Restructuring/Insolvency. The Restructuring/Insolvency practice is one of nine Jones Day practices receiving a global-wide practice ranking.
Jasper Berkenbosch (Amsterdam), Fabienne Beuzit (Paris), Ben Larkin (London), and Juan Ferré (Madrid) were ranked in the field of Restructuring/Insolvency in Chambers Europe 2025.
Fabienne Beuzit (Paris) and Jasper Berkenbosch (Amsterdam) were among the "Leading Individuals" ranked in the 2025 edition of The Legal 500 EMEA guide in the field of Restructuring and Insolvency or Insolvency. Rodolphe Carrière (Paris) was named a "Leading Associate" in the practice area Insolvency.
Part II of a two-part article written by Corinne Ball (New York) and Christopher DiPompeo (Washington) titled "Rediscovering Section 157(b)(5) Transfers in Mass Tort Bankruptcies" was published in the April 2025 edition of the ABI Journal.
Dan B. Prieto (Dallas) was on a panel discussion titled "Balancing the Imperfections: Is Bankruptcy a Viable Option for Resolving Mass Torts?" on April 4, 2025, at the Biennial Bankruptcy & Restructuring Symposium at Tulane University Law School in New Orleans.
Kevyn D. Orr (Washington) received a "2025 Diversity in Business Award" from the Washington Business Journal. His print profile for the award can be accessed here.
Roger Dobson (Sydney) was recognized as a "Lawyer of the Year" in the practice area Distressed Investing and Debt Trading in the 2026 edition of The Best Lawyers in Australia.™ In addition, Roger and Sally A. Stitz (Brisbane; Global Disputes) were recognized in the practice area Insolvency and Reorganization Law.
An article written by Corinne Ball (New York) titled "Distressed Investing: New Development in Managing Access to Bankruptcy Relief" was published in the February 26, 2025, edition of the New York Law Journal.
Kevyn D. Orr (Washington) moderated a discussion in April 2025 at the Legends Speaker Series sponsored by operational turnaround and financial restructuring services firm Pivot >.
An article written by Heather Lennox (Cleveland and New York), Jasper Berkenbosch (Amsterdam), Dan T. Moss (Washington and New York), and Sid Pepels (Amsterdam) titled "The EU Harmonisation Project and Its Potential for impact" was published in the Q1 2025 edition of INSOL World.
An article written by Dan T. Moss (Washington and New York), Daniel J. Merrett (Atlanta), and Ben Rosenblum (New York) titled "Boston Generating: Second Circuit Triples Down on Its Holding that Transfers Made Under Securities Contracts Are Safe Harbored in Bankruptcy if the Debtor-Transferee is a Customer of a Financial Institution" was published on March 3, 2025, by the Harvard Law School Bankruptcy Roundtable.
An article written by Corinne Ball (New York), David S. Torborg (Washington), Michael C. Schneidereit (New York), and Dan T. Moss (Washington and New York) titled "Ninth Circuit: reversal on appeal of order denying Chapter 15 recognition does not retroactively trigger automatic stay in the March 2025 INSOL International Restructuring Alert.
An article written by Michael C. Schneidereit (New York) and Nicholas J. Morin (New York) titled "Fifth Circuit Rules that Serta Simmons Uptier Violated Credit Agreement" was published on April 2, 2025, by Lexis Practical Guidance.
An article written by Genna Ghaul (New York) titled "Second Circuit: Bankruptcy Code's Lease Assumption and Assignment Provisions Apply Only to 'True Leases'" was published on March 28, 2025, by Lexis Practical Guidance.
An article written by Daniel J. Merrett (Atlanta) titled "Ninth Circuit: No Injury to Creditors Required for Avoidance of Intentionally Fraudulent Transfer" was published on April 1, 2025, by Lexis Practical Guidance.
An article written by Dan T. Moss (Washington and New York), David S. Torborg (Washington), Ryan Sims (Washington), and S. Christopher Cundra IV (Washington) titled "New Jersey Bankruptcy Court Ruling Highlights the Utility of Chapter 15 in Enforcing Foreign Bankruptcy Court Orders in the United States as a Matter of Comity" was published on March 30, 2025, by Lexis Practical Guidance.
Corinne Ball (New York) has been awarded the "2025 Outstanding Contributions Award" for her contributions to and service in the field of insolvency and the insolvency community by the International Insolvency Institute, a nonprofit corporation dedicated to the improvement of international insolvency systems and procedures. The award will be presented during the Institute's 25th annual conference in São Paulo, Brazil, on June 8–10, 2025.
Lawyer Spotlight: Fabienne Beuzit
Fabienne Beuzit, a partner in the Paris Office, leads the office's Business Restructuring & Reorganization team, focusing on bankruptcy proceedings, court and out-of-court restructurings, distressed M&A matters, and all types of insolvency-related litigation. She has represented debtors, lenders, shareholders, and investors in numerous restructurings in France and internationally and has worked on many major insolvency and reorganization cases.
Fabienne has advised on significant debt restructuring cases, represented parties in prepackaged chapter 11 cases, and has served as investors' counsel on a broad range of asset deals. Her experience includes setting up strategic carve-out, reorganization, or restructurings of groups and assisting turnaround distressed funds in the sale, acquisition, or investment of distressed equity interests.
Chambers Europe noted that Fabienne has "strong technical expertise coupled with business sense." Legal 500 EMEA named her among the "Leading Individuals" in France, and described her as "totally dedicated to clients" and "a tough negotiator and very creative as she masters all the aspects of a restructuring case."
