News

Stay up to date with important news, special announcements, and resources to help you along the way.

June 8, 2022

Fifth Circuit Court of Appeals Clarifies and Reinforces Holdings of 2004 In re Mirant Corp. Case

One of the requirements for confirmation of a Chapter 11 reorganization plan by bankruptcy courts is that “any governmental regulatory commission with jurisdiction, after confirmation of the plan, over the rates of the debtor has approved any rate change provided for in the plan, or such rate change is expressly conditioned on such approval.” 11 U.S.C. § 1129(a)(6).

May 13, 2022

The (Not So) Strange Case of the Texas Two-Step

The Texas Two-Step, as its name suggests, has two major parts. First, a company undertakes a “divisive merger,” splitting itself into two new organizations. One of the new creations takes on the liability of the original company, along with a minimal amount of assets. The other non-liable entity arranges a financing agreement. Second, the liable entity files for bankruptcy, shielding itself from the full claims of creditors.

March 29, 2022

Fifth Circuit Court of Appeals Weighs in on the Intersection of Bankruptcy Code Sections 363(f) and 365(h)

On February 16, 2022, the United States Court of Appeals for the Fifth Circuit in the case of In re Royal Street Bistro, L.L.C., 2022 WL 499938 (5th Cir. Feb. 16, 2022), in reaching an outcome in line with two other circuit courts, the Seventh Circuit and the Ninth Circuit, permitted a Chapter 11 trustee to sell a debtor’s real property free and clear of the leasehold estates held by certain non-debtor tenants. 

February 9, 2022

Insurers Beware: Recent Eleventh Circuit Court of Appeals Opinion Limits Ability of Insurance Companies to Lift Automatic Stay for “Defensive Actions”

On November 16, 2021, a three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit (which has jurisdiction over federal cases originating in the states of Alabama, Georgia, and Florida) issued an opinion in State Farm Fla. Ins. Co. v. Carapella (Inre Gaime), No. 20-12240, 2021 U.S. App. LEXIS 34133 (11th Cir. Nov. 16,2021) upholding a decision by a bankruptcy judge to deny an insurance company’s motion for relief from the automatic stay for the purpose of intervening in a state court action to vacate a substantial default judgment against its insured, which thereby limited its ability to defend a claim against the company for bad-faith made by the trustee for the insolvent insured’s bankruptcy estate. The ruling is certain to have significant effects on the strategic decisions made by insurance companies as to how they defend insureds under their policies.

February 4, 2022

Bankruptcy Attorney Ethics: Bankruptcy Trustee's Gamble in Financing Litigation Backfires When Judge Finds Fraud

The debtor, Decade LLC, SAC (“Decade”), claimed to have purchased two companies founded by Aaron Goodwin, a top NBA agent, and his brother Eric Goodwin. The Goodwins agreed to sell the companies to Decade for $35 million; however they insisted on several terms, including that if Decade failed to make an installment payment, then the ownership of all player contracts would revert to Aaron Goodwin.

January 20, 2022

Is PACA Debt Non dischargeable? The Latest Court Decision That You and Your Bankruptcy Attorney Need to Know About

Whether you are a business owner or bankruptcy attorney, this lack of guidance has been a frustration for many individuals. Fortunately, the United States Bankruptcy Court for the Northern District of Illinois in the recent case of Royal Garden Produce LLC v. Sanchez (In re Sanchez) addressed this issue in a detailed manner.

December 8, 2021

Few Legal Issues are Truly “Bolierplate” – Why Attorneys Should Beware of Plagiarism

Bankruptcy Judge Scott C. Clarkson of the Central District of California recently issued an Order admonishing an attorney for plagiarism.

November 11, 2021

Bankruptcies in these Precarious Times of COVID-19

During these unpredictable times, COVID-19 seems to have impacted virtually every sector of the U.S. economy; from the unemployment rate, to the U.S. gross domestic product, and even at times the grocery aisles and gas stations. With the uncertainties of COVID-19 the impact of future Chapter 11 bankruptcy filings has also been unpredictable.

November 8, 2021

Nevada State Courts Have Concurrent Jurisdiction with Bankruptcy Courts Over Fraudulent Transfer Action

On September 16, 2021, the Nevada Supreme Court, sitting en banc, issued its opinion in the case of Superpumper, Inc. et al. v. Leonard, 137 Nev. Adv. Op. 43 (Sept. 2021), holding that Nevada state district courts have concurrent subject matter jurisdiction with federal bankruptcy courts over fraudulent conveyance actions.

October 8, 2021

Third Circuit Clarifies Timeline for Chapter 11 Administrative Claims

Dates matter in bankruptcy. After the bar date, no one can file claims against the debtor (unless they qualify for an exception). The Third Circuit in Ellis v. Westinghouse Electric Company, LLC, (2021), however, recently considered the question about what happens when an administrative claim is submitted after the bankruptcy court confirms a debtor’s Chapter 11 plan but prior to the effective date of the Chapter 11 plan.

October 5, 2021

$3.75 Billion in Claims in Madoff Case Revived for Trustee of the Madoff Bankruptcy Trust

On August 30, 2021, the Second Circuit Court of Appeals heard an appeal in one of the longest-lasting Bernard Madoff Ponzi scheme cases. In the appeal, the trustee for the Madoff bankruptcy estate (the “Trustee”) claimed that the District Court used the wrong standard when determining what “good faith” meant in bankruptcy. The Trustee also claimed the defendants were required to raise this issue as an affirmative defense. This appeal was a test case, brought by the Trustee, to clear the way for a larger group of cases by bankruptcy attorneys.

September 15, 2021

New Working Paper Raises Significant Concerns Regarding “Bankruptcy Directors” in Chapter 11 Cases

Bankruptcy practitioners have been anecdotally aware of the increased presence of so-called “bankruptcy directors” in Chapter 11 cases over the last decade. Three academics, however, recently released a seminal working paper containing the first empirical study on the effect such directors have in Chapter 11 cases.

August 13, 2021

Jevic: It’s Back for the Bankruptcy Attorney Business

The landmark commercial bankruptcy case Czyzewski v. Jevic Holding Corp. (2017), as originally filed in 2008, made bankruptcy case law by holding that a structured Chapter 11 settlement may not include distribution to creditors in violation of the priorities in Section 507(a):

August 9, 2021

SBA's 2nd Notice: Everything You Need to Know About the Extended Paycheck Protection Program

On April 8th, the Small Business Administration issued a Second Notice to lenders regarding an important modification made to the March 30, 2021 SBA Procedural Notice 5000-20074 and SBA Forms 3506, 3507, and 750.The modification contains a key restriction, “which provides from that from June 1, 2021 through June 30, 2021, SBA shall not accept new Paycheck Protection Program (“PPP”) Loan guaranty applications from lenders and shall only process PPP Loan guaranty applications submitted by lenders to SBA before June 1, 2021.”

June 23, 2021

The Tricky Evolution of Personal Jurisdiction

While a defendant in a bankruptcy case cannot waive subject matter jurisdiction, a different set of rules apply in personal jurisdiction. Reynolds v. Behrman lays out some of the groundwork for understanding how these rules apply, offering crucial insight for a bankruptcy attorney or CPA.

June 7, 2021

Bankruptcy Judge Weighs in on Questionable Second Circuit Safe Harbor Ruling

As recently reported by the American Bankruptcy Institute (ABI), the Supreme Court is weighing whether to grant or deny a petition for certiorari that challenges the Second Circuit's decision in In re Tribune Company Fraudulent Conveyance Litig. (2nd Cir. 2019). At issue in Tribune is the denial of safe harbor, as established in Section 546(e).

May 19, 2021

Circuits Split on Applying Derivative Jurisdiction to a Lack of Personal Jurisdiction

As recently reported by the American Bankruptcy Institute, an Eleventh Circuit decision regarding derivative jurisdiction in relation to subject matter jurisdiction has created a circuit split.

May 5, 2021

The Third Circuit Confirms That Bankruptcy Setoff Rights Are Limited To Two-Party Obligations

The court ruled against drug distributor McKesson Corporation (“McKesson”) in its attempt to clear $6.9 million in debt owed to a pharmaceutical company by leveraging $9.1 million the drug maker owed to one of McKesson's subsidiaries. The Third Circuit affirmed lower courts' decision to reject this “triangular setoff,” indicating that the arrangement is unenforceable under the Bankruptcy Code regardless of parties' contract terms.

April 6, 2021

Lien Disclosure and Renewal in Bankruptcy

On February 2, 2021, the U.S. Bankruptcy Court for the Northern District of Ohio issued a judgement on In re Horvath, a case in which Debtors reopened a Chapter 7 bankruptcy case ten years after the lien had originally been filed in order to avoid a renewed lien.

March 30, 2021

Does Bankruptcy Attorney Negligence Restrict a Debtor's Lien Avoidance?

In a recent opinion, Judge Russ Kendig of the U.S. Bankruptcy Court Northern District of Ohio highlighted the importance of an attorney’s investigative obligations.

March 2, 2021

Fed Sounds Alarm on Commercial Real Estate and Business Bankruptcy

Many businesses are struggling with debt or reduced demand in the wake of the COVID-19 pandemic. As of May 2020, it was estimated that more than 100,000 businesses had closed permanently since March.

February 23, 2021

Must Small Businesses Be ‘Currently Engaged’ in Business for Subchapter V Debt Relief?

The Small Business Reorganization Act (SBRA) was passed in 2019 to expedite the bankruptcy process for small business debtors and reduce costs. This act did not change existing chapter 11 provisions in the Bankruptcy Code, but rather it added new subchapter V terms that streamline the reorganization path for entities with total debts under about $2.7 million.

February 11, 2021

Eleventh Circuit Authorizes the SBA To Exclude Debtors From Receiving PPP Loans

On March 27, 2020, the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act provided the U.S. Small Business Association (SBA) with the authority to issue loans under the Paycheck Protection Program (PPP.)

January 28, 2021

“Excessive Caution” in a Bankruptcy Case Could Limit Creditors’ Fee Allowance Request

In late 2020, the U.S. Bankruptcy Court for the Northern District of Iowa clarified Section 506(b) of the Bankruptcy Code. The Court’s decision imposes the responsibility on lenders’ counsel to “exercise restraint” in billing judgments, suggesting that a creditors’ fees should not exceed the debtors’ in a bankruptcy hearing.

January 11, 2021

Safe Harbor-Protected Transactions: Detroit Judge Challenges Second Circuit Ruling Based on Supreme Court Decision

In 2018, a Supreme Court Case clarified when the safe harbor applies. In its ruling, the Court unanimously agreed the safe harbor does not protect allegedly fraudulent transfers “in which financial institutions act as mere conduits.” The American Bankruptcy Institute, however, highlighted how recent litigation pokes holes in this conclusion, particularly when it comes to the definition of a financial institution.

January 5, 2021

Is Your Protection as an Estate Representative Based on a Court’s Discretion?

The Barton Doctrine dates back to an 1818 Supreme Court decision, dictating when a litigant can bring a lawsuit against an estate trustee. Throughout the 20th century, court rulings extended this coverage to include a range of fiduciaries granted authority by a bankruptcy court, like bankruptcy attorneys, accountants, and debtors’ counsel.

October 27, 2020

How Business Bankruptcies Work

Bankruptcy often serves as a last resort for business owners, but it can also make a difference long before desperate measures are required. Business bankruptcy may be the best situation if your personal assets appear to be at risk.

October 15, 2020

Everything You Need to Know About Chapter 11 Bankruptcy

Chapter 11 bankruptcy, most commonly used by corporate entities, involves the reorganization of a debtor’s business dealings, assets, and debts. Chapter 11 is perhaps the most complex form of bankruptcy under U.S. bankruptcy laws, so it makes sense that you might have a few questions about how long it takes, how it affects employees, and what it means for a business moving forward.

September 22, 2020

How to File for Bankruptcy After Coronavirus Shut Down Your Business

Many small businesses across the country are struggling to survive the challenges posed by the COVID-19 pandemic. If your business is searching for options and time to turn around operations or develop new business lines, bankruptcy can create that space and time. 

September 10, 2020

What Are the Types of Bankruptcy for Businesses?

Business bankruptcy might bring to mind bleak images of financial ruin that involve the loss of all valuable property. In reality, bankruptcy takes many forms—and in several situations, it’s a viable solution to the burden of debt that overshadows many business operations.

August 31, 2020

What to Expect From the Anticipated Surge of Business Bankruptcies in Nevada

Businesses of all sizes and spanning a range of industries are suffering the economic fallout of COVID-19. This can be seen not only in layoffs and furloughs, but also in increased business closures and bankruptcies. A Bloomberg report published in early July revealed that nearly 200 businesses cited COVID as a factor in declaring bankruptcy. Unfortunately, this is only the beginning.

June 16, 2020

Student Loan Debt

Student loan debt is at an all time high, but too many people’s surprise, it is helping the U.S. Economy - according to a new report released by the White House Council of Economic Advisers.

June 16, 2020

Caesars Bankruptcy Venue Determined

Delaware Bankruptcy Judge Kevin Gross ruled the reorganization of Caesars Entertainment Corp.’s largest operating unit will take place in Chicago, major victory.

June 16, 2020

Ninth Circuit Rules on Debtor’s Ability to 
Recover Reasonable Attorney’s Fees for Stay Violations

On October 14, 2015, the Ninth Circuit Court of Appeals (the “Court”) issued an opinion that addressed the timeframe for which debtors in bankruptcy can recover attorney’s fees for seeking damages for violations of the automatic stay.

Debtors Must Provide Clear Evidence to Argue a Bankruptcy Appeal’s Mootness

The appeal followed the confirmation of a Chapter 11 reorganization plan filed by corporate debtors operating nursing homes. Under the plan, the debtors agreed to reject leases for unprofitable locations, restructuring their business around cost-effective facilities.

The Outer Limits of Discharge Explored by the Ninth Circuit BAP

As recently reported by the American Bankruptcy Institute (ABI), the Ninth Circuit Bankruptcy Appellate Panel (BAP) has issued a decision that explores “the fringes of the bankruptcy discharge injunction.” They provided meaning for “personal liability of the debtor” as laid out in Section 524(a), and further defined the ability of bankruptcy courts to review decisions by state probate courts.

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