Aaron Boschee

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Attorneys who advise a distressed company usually work very closely with members of the board of directors.  A recent opinion from the United States District Court for the Western District of Texas provides a cautionary reminder to such attorneys not to lose sight of the fact that, notwithstanding that the company acts through its board, the attorneys’ duties are to the company and not to the individual board members.  And, losing focus on the source…
Last month, the Eleventh Circuit Court of Appeals clarified the circumstances under which a creditor can assert a “new value” defense to a preference action under section 547(c)(4) of the Bankruptcy Code—rejecting as dictum language in a prior decision indicating that the new value provided needed to remain unpaid in order to setoff against preference payments.  The Eleventh Circuit’s decision also had the effect of narrowing a split among the circuits. The Background In Kaye
On September 22, 2017, the First Circuit Court of Appeals reversed the district court, and overruled its own prior guidance, to hold that a committee of unsecured creditors had the right to be heard in adversary proceedings related to the restructuring of Puerto Rico’s debt.  The Court’s decision in Assured Guar. Corp. v. Fin. Oversight & Mgmt. Bd. for P.R. (In re Fin. Oversight & Mgmt. Bd. for P.R) places the First Circuit in the…
In its fifth trip to the Seventh Circuit Court of Appeals, the Sentinel Management Group’s bankruptcy case recently explored complex issues bankruptcy practitioners often encounter in large chapter 11 cases with financial services debtors.  In a far-ranging opinion, the Seventh Circuit held that the Bankruptcy Court’s oral “clarification” of an earlier order, which had already been reversed on appeal, could not serve to collaterally estop parties under the mandate rule and the law-of-the-case doctrine. …
This Monday, the U.S. Supreme Court rejected General Motors’ petition for a writ of certiorari, which GM filed in an attempt to overturn a ruling by the Second Circuit Court of Appeals related to the sale of substantially all of GM’s assets in bankruptcy.  When we last visited the case in a prior blog post, GM’s petition to the Supreme Court was still pending.  With no prospect of Supreme Court review, the exception to…
In a prior blog post, we discussed the Second Circuit Court of Appeals’ reversal of the bankruptcy court in In re General Motors.  In its opinion, the Second Circuit held that a sale of assets without proper notice to potential plaintiffs with defect claims violated the plaintiffs’ due process rights and resulted in a sale to “New GM” that was not, in fact, “free and clear” of those claims.  Recently, with the case remanded,…
Last week, the Second Circuit Court of Appeals reversed a bankruptcy court order barring tort claims for product defects against the purchaser of General Motors’ (“Old GM”) assets.  The purchaser (“New GM”) had purchased Old GM’s assets “free and clear” in Old GM’s 2009 bankruptcy case under section 363 of the Bankruptcy Code.  The Second Circuit’s ruling is certainly a victory for the plaintiffs who are seeking damages for personal injuries arising out of product…
Determining whether a contract is executory and, thereby, subject to assumption or rejection under Section 365(a) of the Bankruptcy Code, can be a difficult and fact intensive inquiry. The Eighth Circuit Court of Appeals recently held, in an en banc decision, that continuing obligations under a trademark licensing agreement were insufficient to render the agreement executory. The unstated implication was that negative contractual obligations were “less material” than positive obligations in determining whether the parties…