Elliot Smith

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In a June 20, 2018 opinion, Judge Carey of the United States Bankruptcy Court for the District of Delaware sustained an objection to a proof of claim that had been traded during the bankruptcy case and filed by the claim purchaser. The opinion highlights the importance of being vigilant in conducting diligence before acquiring a claim against a bankruptcy debtor, especially regarding the ability of the original creditor to assign the claim without the debtor’s consent.…
More and more states are legalizing marijuana, whether for medical or recreational purposes. As businesses try to enter this space, competition will “weed out” the weakest competitors.  But are marijuana dispensaries and growers, and those providing ancillary services to them, able to seek relief under the Bankruptcy Code? We, along with our colleagues, John Wyand and Sarah Stec, this week published an article with Practical Law addressing this topic. We hope that you enjoy the article and…
When creditors are left holding the bag after providing valuable goods or services to a company that files for bankruptcy relief, they often feel misused and that an injustice has occurred. After all, they are legitimately owed money for their work or their product, and the debtor has in effect been unjustly enriched because it received something for nothing. Unsecured creditors do not have recourse to collateral, and typically have to wait in line to…
In an article just published in the Bankruptcy Strategist, Norman Kinel and Elliot Smith explore the practical impact of the Sixth Circuit Court of Appeal’s recent decision in Indian Harbor Insurance Company v. Zucker, et al., 2017 U.S. App. LEXIS 10821, which bankruptcy practitioners – particularly those representing creditors’ committees – need to consider, because having the wrong plaintiff or the wrong mechanism in place to pursue claims against a debtor’s officers and directors could…
On August 4, 2017, the Third Circuit Court of Appeals issued its ruling in Varela v. AE Liquidation, Inc. (In re AE Liquidation, Inc.), 2017 U.S. App. LEXIS 14359 (3d Cir. 2017), holding that WARN Act liability is triggered only when a mass layoff becomes probable – “that is, when the objective facts reflect that the layoff was more likely than not.” In doing so, the Third Circuit joined the Fifth, Sixth, Seventh, Eighth…
In Metropolitan Government of Nashville & Davidson County v. Hildebrand, the Sixth Circuit Court of Appeals explains how to read the phrase “applicable nonbankruptcy law” as it is used in the United States Bankruptcy Code.  The case – a chapter 13 individual bankruptcy case – discussed the phrase in the context of section 511(a) of the Bankruptcy Code, which deals with the appropriate rate of interest applicable to tax claims.  However, the issue is…
Among other strategic considerations a financially troubled company must grapple with as it prepares for a potential bankruptcy filing is how best to effectively implement necessary workforce reductions as part of its overall reorganization efforts. A workforce reduction could potentially give rise to severance and other employee obligations, and, under certain circumstances, could also give rise to significant WARN Act claims.  Understanding and appropriately planning for these kinds of claims is important, especially because employee-related…
In bankruptcy cases, things often move more slowly than people would like or expect.  In addition to dealing with oversight by the bankruptcy court and the United States Trustee, a debtor typically spends significant time engaging with its lenders and secured creditors, committees of unsecured creditors, and any number of other key stakeholders.  Court approval is needed for most significant events in the case, for anything out of the ordinary course of business, and, at…
Last week, we discussed the complexities of metals exploration chapter 11 bankruptcy cases and addressed several of the notable issues that arise in those cases. The discussion of significant issues continues below. Enforceability of Rights of First Refusal  Mining exploration is often undertaken by partners, one of which may contribute the mining properties and the other is responsible for exploration and development. These arrangements, such as joint venture exploration, development and mine operating agreements,…
On August 4, 2015, the Second Circuit weighed in for the first time on the circumstances in which the confirmation of a Chapter 11 plan could strip a secured creditor of its lien. In City of Concord, N.H. v. Northern New England Telephone Operations LLC (In re Northern New England Telephone Operations, LLC), the Second Circuit held that, although the general rule is that liens and security interests pass through bankruptcy unaffected, section…