Corporate Restructuring Review Vol. 21, No. 5 | September–October 2022 – Insolvency/Bankruptcy

In this problem:

Lawyer Spotlight: Gregory M. Gordon

Greg Gordon represents clients in complex and high-profile cases under Chapter 11 and corporate restructurings. His experience includes out-of-court restructurings, pre-packaged bankruptcies, distressed M&A transactions and cross-border insolvencies. He has helped clients achieve permanent resolutions of mass tort liabilities, including asbestos and talc liabilities. Recently, Greg successfully represented LTL Management, a subsidiary of Johnson & Johnson, in a Chapter 11 case it filed to resolve its talc liability. Greg works in the Dallas office and is a Fellow of the American College of Bankruptcy.

Texas District Court: Costs of Breaking Bankruptcy Sale Passed Both Business Judgment Test and Administrative Expense Standard

In In Bouchard Transp. Co., Inc.639 BR 697 (SD Tex. 2022), the United States District Court for the Southern District of Texas affirmed a bankruptcy court order approving $3.3 million in breach costs and over $885,000 reimbursement dollars to a disappointed bidder. at an auction of the debtors’ assets, finding that the payments met both the business judgment test under Section 363(b) of the Bankruptcy Code and the standard for approval of claims 503(b) administrative expense reimbursement. [read more …

Denied Chapter 11 Plan Confirmation Wrongful Even Though Plan Support Agreements Violated Disclosure Requirements

In Regarding LATAM Airlines Grp. HER2022 WL 2206829 (Bankr. SDNY Jun 18, 2022) (unpublished notice), as amended2022 WL 2541298 (Bankr. SDNY July 7, 2022),
reprieve pending appeal deniedNo. 20-11254 (JLG) (Bankr. SDNY July 7, 2022), certification refusedNo. 20-11254 (JLG) (Bankr. SDNY July 26, 2022), aff’d, 2022 WL 3910718 (SDNY Aug 31, 2022), U.S. Bankruptcy Court for the Southern District of New York, in an unpublished notice, dismissed an objection to the confirmation of a chapter plan based on the alleged violation of Chapter 11 by debtors. plan solicitation requirements by entering into agreements with certain creditors, prior to court approval of a disclosure statement, that required them to vote in favor of a plan in exchange for the acceptance of their claims. According to the court, even if these plan support agreements were improper, the only remedy for the breach was the rejection of creditor votes, which would not change the outcome of the voting process. [read more …

Third Circuit Sets Standard for Appointment of Future Claims Representatives in Asbestos Bankruptcy Cases

In In re Imerys Talc America, Inc.38 F.4th 361 (3d Cir. 2022), the United States Court of Appeals for the Third Circuit ruled as a matter of first impression that a prospective claims representative (“FCR”) in a case of Asbestos must be more than just a “disinterested person”—the standard applied to some professional retentions in bankruptcy. Instead, like members of official creditors’ committees, an FCR must not only be free of conflicting interests, but also to fulfill fiduciary duties towards future claimants, including duties of undivided loyalty and honesty.


Second Circuit rules that bankruptcy courts can impose appellate legal fees as a penalty for contempt

In Law Offices of Francis J. Reilly, Esq. vs. Selene Finance, LP (In re DiBattista)33 F.4th 698 (2d Cir. 2022), the United States Court of Appeals for the Second Circuit ruled, in an apparent first impression case, that a bankruptcy court had erroneously concluded that it did not did not have the authority to award attorneys’ fees incurred on appeal by a debtor seeking to enforce a contempt order for breach of a bankruptcy discharge order. [read more …

Seventh Circuit: Participating secured creditor in Chapter 11 case bound by terms of confirmed plan that extinguished lien

In In re Aguirre, 37 F.4th 427 (7th Cir. 2022), the United States Court of Appeals for the Seventh Circuit upheld a lower court ruling that because a tax lien claimant was “a party in bankruptcy case”, the creditor’s tax lien was not going through bankruptcy unaffected by the terms of a confirmed Chapter 11 plan that extinguished the lien in exchange for an agreement to pay the secured debt of the creditor in full in cash. The court also overturned an order directing a state court to void a tax deed issued to the creditor. [read more …

Eleventh Circuit Rules Coal Act Payment Obligations Arising in 2016 Fulfilled by Chapter 11 Plan of 1995

In U.S. Pipe & Foundry Co. v. Holland (In re US Pipe & Foundry Co.)32 F.4th 1324 (11th Cir. 2022), a divided panel of the United States Court of Appeals for the Eleventh Circuit ruled that the alleged obligation of certain debtors to pay retiree health benefits imposed by the Coal Industry Retiree Health Benefit Act of 1992 was released in 1995 upon confirmation of a Chapter 11 plan, although the obligation to pay was not triggered until 2016. According to the majority, the obligation to pay was a “claim” in 1995 and was therefore discharged upon confirmation of the debtors’ plan. [read more …

Supreme Court of Delaware: No “Common Law Insolvency Exception” Allows Delaware Corporation to Transfer Assets to Creditors Instead of Foreclosure Without Shareholder Consent

In Stream TV Networks, Inc. v SeeCubic, Inc.2022 WL 2149437 (Del. June 15, 2022), the Delaware Supreme Court reversed and reversed a 2020 Delaware Court of Chancery decision that held the assets of Stream TV Networks, Inc. (“Stream”), a insolvent Delaware 3D television technology company, could be transferred to an affiliate of two of Stream’s secured creditors in lieu of foreclosure without seeking Stream’s stockholder approval under Section 271 of the Act General on Delaware Corporations or Stream’s Certificate of Incorporation. [read more …

Fifth Circuit: Bankruptcy appeal wrongly returned by district court to justice of the peace for final decision

In In re South Central Houston Action Council38 F.4th 471 (5th Cir. 2022), the United States Court of Appeals for the Fifth Circuit reversed the decision of a district judge on appeal from a bankruptcy court judgment, finding that the district court had erroneously returned the appeal to the district judge for a final decision, rather than a recommendation for consideration and adoption by the district court. [read more …

worthy of interest

For the third consecutive year, Law360 named
Jones Day a “Ceiling Smasher” for having one of the highest percentages of female partners in law firms with more than 600 lawyers.

Jones Day recently ranked “Best of the Best” in 12 categories in the first report of its kind “Associate Satisfaction A-Listers 2022: BTI Survey of Law Firms Where Associates are Happiest”. The BTI Consulting Group notes that Jones DayThe results of surpassed the “majority of the other 650 companies competing for business in large corporations whose associates responded to the survey”.

Bruce Bennett (Los Angeles) was appointed to Daily newspaper2022 list of the best bankruptcy lawyers.

The 2023 edition of The best lawyers in Germany“, in cooperation with Handelsblattone of Germany’s leading business publications, recognized Dr. Olaf Benning (Frankfurt) in the field of restructuring and insolvency law.

The 2022 edition of The Legal 500 EMEA named guide
Fabienne Beuzit (Paris) as “Next Generation Partner” in the field of insolvency.

On September 6, 2022, Corinne Ball (New York) presented on cross-border bankruptcy cases under Chapter 15 of the Bankruptcy Code at the 22nd Annual Conference of the International Insolvency Institute in Toronto, Canada.

Jeffrey B. Ellman (Atlanta),
Kevyn D. Orr (Washington),
Thomas M. Wearsch (Cleveland),
Caitlin K. Cahow (Chicago),
Anna Kordas (New York), James O. Johnston (Los Angeles), Aldo L. LaFiandra (Atlanta and New York), Heather Lennox (Cleveland and New York), Gregory M. Gordon (Dallas), Corinne Ball (New York) Carl E. Black (Cleveland), Bruce Bennett (Los Angeles), Brad B. Erens (Chicago), Genna Ghaul (New York)and Nicholas J. Morin (New York) have been recognized in America’s Best Lawyers (2023) in the areas of Bankruptcy and Debtor Creditors’ Law/Insolvency and Reorganization Law and/or Litigation—Bankruptcy.

On August 25, 2022, an article written by Corinne Ball (New York) titled ‘Scheme proceedings initiated by Cayman Holding Company to restructure its New York public debt incurred to support Chinese real estate operations obtains recognition under Chapter 15 in ‘modern earth‘” was published in the New York Law Review.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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