A decision earlier this year in the LATAM Airlines Group bankruptcy addressed the validity of claims arising from intercompany loans between a corporate debtor’s affiliates. Judge James L. Garrity’s opinion overruling objections to the claims provides helpful guidance on an
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What Inquiring Minds Should Have Known – Second Circuit Ruling on Inquiry Notice Saves Citibank from $900 Million Payment Mistake
A recent decision by the Second Circuit Court of Appeals has saved Citibank from the ramifications of an internal error that could have cost it nearly $900 million. Although the recipients of an unintended transfer of Citibank’s funds could have…
Nobody’s Default? Ninth Circuit to Decide Whether Defaults Need to be ‘Material’ Before Landlords Get Adequate Assurance Under the Bankruptcy Code
Section 365 of the Bankruptcy Code allows debtors to “assume” unexpired leases, recommitting themselves and their counterparties to the existing lease terms, subject to approval by the Bankruptcy Court. If there are existing defaults under the lease, section 365(b) appears…
No Honor Among Creditors: Delaware Judge Issues Important Ruling On “Uptier” Transaction
Intercreditor disputes in bankruptcy are common. Typically, however, they center around predictable disagreements between senior or junior classes of creditors such as valuation battles or lien perfection challenges. A recent decision in the Delaware chapter 11 case of TPC Group…
Ten Years Gone – Delaware Bankruptcy Judge Rejects Effort to Extend Lookback Period for Avoidance of Pre-Bankruptcy Transfers
A recent decision by Delaware Bankruptcy Judge John Dorsey will limit the ability of bankruptcy trustees to expand the lookback period for avoiding pre-bankruptcy transfers beyond the four years provided under most state law fraudulent conveyance statutes. In dismissing a…
Second Circuit Split Resolved: No PPP Loans for Debtors in Bankruptcy
In March, the U.S. Court of Appeals for the Second Circuit joined a growing majority of courts with Springfield Hospital, Inc. v. Administrator for the U.S. SBA, holding that no matter how forgiving its terms, a CARES Act’s Paycheck…
Preoccupied Congress Fails to Act, Sending Debt Limit Back Down to $2.7 Million and Reducing Availability of Subchapter V Protection for Small Businesses
For now, the Subchapter V debt limit is back down to $2.7 million. Overshadowed by the contentious confirmation hearings for historic Supreme Court nominee Ketanji Brown Jackson, the Senate Judiciary Committee failed to act on proposed legislation that would have…
Does a Declaration of Independence Suffice? A New Study Raises Significant Questions About “Independent Directors” of Large Distressed Companies
A paper to be published soon in the University of Southern California Law Review, “The Rise of Bankruptcy Directors,” is sharply critical of the increased use of supposedly “independent directors” by distressed companies, often in anticipation of filing…
$7.5 Million Increased Debt Limit For Small Business Debtors May Become Permanent
The law that temporarily increased the maximum amount of debt a company may have to qualify as a small business under Subchapter V – the cheaper, easier, and faster version of Chapter 11 – from $2.7 million to $7.5 million,…
Driving While Unimpaired – Delaware Judge Issues Important Ruling in Hertz Chapter 11 Case on Allowance of Make-Whole Premiums, Treatment of Unimpaired Creditors, and Postpetition Interest (Part 2)
The allowance of postpetition interest in solvent debtor chapter 11 cases has become an important issue in recent years for corporate issuers, bondholders and other creditors. This post will examine a recent decision in the Hertz case by Judge Mary…