Bankruptcy Law Insights

Commentary & Analysis on Current Events & Issues in Large & Mid-Market Chapter 11 Cases

The U.S. Court of Appeals for the Third Circuit recently became the first circuit court to address the question of whether a corporate parent can set off an obligation that it owes to a bankrupt company against a claim owed by such company to the parent’s subsidiary. A couple of years ago, in the chapter 11 case of Orexigen Therapeutics in the District of Delaware, former Bankruptcy Judge Kevin Gross denied a motion to allow such a “triangular” setoff.…
A recent decision by Judge Jed Rakoff of the Southern District of New York highlights the risks faced by directors and officers of companies in financial distress who fail to undertake properly their duties to the company and its stakeholders. In mostly denying a motion to dismiss claims brought against former directors and officers of Nine West Holdings and Jones Group, its predecessor company, Judge Rakoff’s opinion highlights the limits of protective legal doctrines such…
The much-ballyhooed COVID relief bill passed by Congress at the end of last year, in addition to providing for $600 checks to millions of people, includes several COVID-related amendments to the U.S. Bankruptcy Code. Some of these changes will have a significant direct impact, at least temporarily, on the rights of commercial landlords and tenants in chapter 11 cases. The bill amends Section 365(d)(4) of the Bankruptcy Code, which provides that a commercial property lease…
The New York Court of Appeals recently handed down an important opinion on out of court restructurings involving bond debt. In CNH Diversified Opportunities Master Account, L.P., v. Cleveland Unlimited, Inc., the Court of Appeals, in a 4–3 ruling, diverged from the Second Circuit’s ruling a few years ago in Marblegate Asset Mgt., LLC v Education Mgt. Fin. Corp. and resuscitated rights of minority bondholders under the Trust Indenture Act which were limited under Marblegate.…
2020 is on pace to set a record as the busiest year for bankruptcy filings since the Great Recession.  In this episode on Kelley Drye Legal Download podcast, Bankruptcy and Restructuring Partner Bob LeHane and Special Counsel Jennifer Raviele discuss the current state of retail and restaurant bankruptcy cases, the impact of the global pandemic, and what to expect in the future. Listeners can tune into their episode of Kelley Drye Legal Download podcast here
The impact of COVID-19 is being felt at all levels of the economy and will work its way through bankruptcy courts for years to come.  In these early days, many creditors who are themselves suffering are providing assistance to troubled companies.  Suppliers and commercial landlords are agreeing to various forms of relief, including modified credit terms and rent relief to allow customers to bridge this period of unprecedented disruption.  While these corporate good Samaritans are…
The economic fallout from the COVID-19 pandemic will leave in its wake a significant increase in commercial chapter 11 filings. Many of these cases will feature extensive litigation involving breach of contract claims, business interruption insurance disputes, and common law causes of action based on novel interpretations of long-standing legal doctrines such as force majeure. These issues could be particularly problematic to resolve because of questions stemming from recent Supreme Court decisions regarding the constitutional
Last week, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law, implementing broad relief for individuals and businesses affected by COVID-19.  One of the sections of the CARES Act receiving less attention is a temporary amendment to the Bankruptcy Code to provide streamlined reorganization procedures for businesses with debt of less than $7.5 million.  In February 2020, President Trump signed into law the Small Business Reorganization Act (SBRA) designed to decrease…
As the nation hunkers down to combat the novel coronavirus (COVID-19), bankruptcy courts throughout the country have moved quickly to implement procedures to preserve access to the courts while limiting in-person interaction during the crisis.  Each court’s specific COVID-19 procedures are different, but they largely prohibit in-person hearings, recognize the need for flexibility and adjournments for non-emergent matters whenever possible, and encourage the creative use of technology to allow as many matters to go forward…
Social distancing.  Elbow bumps.  Flatten the curve.  These are the new phrases and behaviors we have learned to avoid exposure to the novel coronavirus (COVID-19).  This epic struggle forces us to reexamine and reevaluate our daily habits, lifestyles and customs as we work collectively to minimize the harm to our families, friends and neighbors throughout the United States.  While some of the lifestyle changes and limitations will be temporary, the human and economic effects of…