In its recent decision in In re Orexigen Therapeutics Inc.,[1] the Third Circuit Court of Appeals held that triangular setoffs are not permissible in bankruptcy because they do not satisfy the mutuality requirement of § 553 of the Bankruptcy Code.
Unsecured Trade Creditors Committee
Committees
In the days leading up to a chapter 11 filing, companies seeking bankruptcy protection commonly ask whether they can continue to pay some of their vendors after the bankruptcy case is filed. On the flip side, in the days following a chapter 11 filing, vendors whose customer recently filed a bankruptcy case have the same question: Can we still get paid?
For the last 25 years, third-party releases in chapter 11 plans were thought to be categorically prohibited in the Ninth Circuit. With its recent decision in Blixseth v.
One thing that Toys “R” Us, Sears and Forever 21 have in common is that all three cases are administratively insolvent.[1] Vendors who extended credit to the debtor after the petition date in reliance on the debtor’s assurances that it had adequate “DIP” financing to justify new credit terms got stuck a second time when there were inad
In Devices Liquidation Trust v. KMT Wireless LLC (In re Pers. Commc’ns Devices LLC), the U.S. Bankruptcy Court for the Eastern District of New York denied a critical vendor’s motion for summary judgment that advocated for a “hindsight extrapolation” approach to the critical-vendor defense.[1]
The value of the legitimate cannabis industry in the U.S. (measured by annual sales) is rapidly approaching $10 billion and is expected by some to exceed $20 billion within the next five years. As the market grows, companies that do not grow or sell cannabis are nonetheless doing business with some that do.
Bankruptcy attorneys are familiar with the statutory defenses to preferences and fraudulent transfers. Less familiar is the so-called “contract assumption defense.” Courts have employed that non-statutory defense to bar preferences and fraudulent transfers based on three primary arguments:
Setoff is a valuable state law remedy for trade creditors with a claim against, and an obligation owing to, an insolvent customer. The right of setoff allows a creditor to “net” or cancel mutual debts to avoid having to pay its debt to a debtor in full while standing in line to recover its claim against the debtor.
Bankruptcy Judge Brendan L. Shannon recently confirmed the chapter 11 plan of RMH Franchise Holdings, Inc. and its affiliated debtors, notwithstanding that the plan proposed significantly better treatment for unsecured trade creditors than for other general unsecured creditors.
With apologies to Twain and Disreali,[1] the title quote may come to mind when, in response to a defense letter outlining an ordinary course of business (OCB) defense comparing consistent and without-undue-collection-effort billing and payment practices in the “preference period”
Fri, 2017-09-08
The panelists for this webinar will discuss the various types of health care cases and the competing interests that arise from a number of perspectives, including debtor, creditor, and provider-side interests. The panel will provide an overview of the uniqueness of bankruptcy health care cases and identify proven strategies to assist practitioners to guide unsecured creditors through these difficult and often complex reorganizations.
Tue, 2017-05-30
The Unsecured Trade Creditors Committee's May Tips of the Trade call featured Neil Steinkamp of Stout Risius Ross, LLC, who discussed the ordinary course of business defense in the context of preference analysis.
Thu, 2017-02-23
The ABI Unsecured Trade Creditors’ Committee (UTC) hosted a Tips of the Trade Call titledInvoluntary Petitions – Issues to Consider before Pulling the Trigger. The panel covered issues from why to commence an involuntary case, to what are the requirements to avoid dismissal, to what are the risks to the petitioning creditors. The speakers were Ashley McDow of BakerHostetler in California and Kathleen DiSanto of Bush Ross in Florida. Mark Felger, a co-chair of the UTC, moderated.
Tue, 2016-09-13
The ABI Unsecured Trade Creditors’ Committee held their most recent Tips of the Trade Call to cover bankruptcy procedure in the country’s busiest business courts. Professionals who represent unsecured trade creditors inevitably find themselves practicing from time to time in the country’s busiest bankruptcy courts, the District of Delaware and the Southern District of New York.
Fri, 2016-04-15
Beware of the Traps: Ethical and Fiduciary Issues for Committee Members and Professionals
Wed, 2016-03-30
The Unsecured Trade Creditors' Committee's call discussed “gifting” and other recent developments regarding application of the absolute priority rule. In In re ICL Holding, the Third Circuit Court of Appeals recently held that “gifting” is permissible in section 363 sales. Conversely, in prior opinions, both the Second and Third Circuits have held that “gifting” is not permissible in the context of a chapter 11 plan.
Thu, 2015-07-16
While lenders have relied on the protections of make-whole provisions in their loan agreements in the voluntary redemption context for years, what happens when a borrower files for bankruptcy and challenges the enforceability of such provisions in the bankruptcy context? This teleseminar explored these questions in light of the recent important decisions in Momentive Performance Materials, Inc. and Energy Future Holdings. Corp, et al.
Tue, 2015-06-09
Judge Rhodes and Michael Richman debated the need for venue reform in the bankruptcy code. Related portions of the commission report were also discussed.
Sat, 2015-04-18
Advanced Defenses to Avoidance Actions: Understanding Them Can Make All The Difference
Wed, 2015-02-04
The Unsecured Trade Creditors Committee's most recent committee call was titled "Tricks of the Trade in Dealing with Executory Contracts," and was moderated by committee Co-chair, Lisa Gretchko. Speakers for this call included David Neumann of Two By Foresight LLC in Cleveland, Ohio, and Shirley Cho of Pachulski Stang Ziehl & Jones LLP in Los Angeles. Please review the attached excerpt from the ABI Commission to Study the Reform of Chapter 11's final report. The full report can be found online at http://commission.abi.org/.
Mr. Eric S. Chafetz
Co-Chair
Lowenstein Sandler LLP
New York, NY
(646) 414-6886
Co-Chair
Lowenstein Sandler LLP
New York, NY
(646) 414-6886
Ms. Samantha Martin
Co-Chair
Cleary Gottlieb Steen & Hamilton LLP
New York, NY
(212) 225-3341
Co-Chair
Cleary Gottlieb Steen & Hamilton LLP
New York, NY
(212) 225-3341
Mr. Gregory J. Flasser
Communications Manager
Potter Anderson & Corroon LLP
Wilmington, DE
(302) 984-6058
Communications Manager
Potter Anderson & Corroon LLP
Wilmington, DE
(302) 984-6058
Ms. Sara Lynne Brauner
Education Director
Akin Gump Strauss Hauer & Feld LLP
New York, NY
(212) 872-7453
Education Director
Akin Gump Strauss Hauer & Feld LLP
New York, NY
(212) 872-7453
Mr. A.J. Webb
Membership Relations Director
Frost Brown Todd LLC
Cincinnati, OH
(513) 651-6842
Membership Relations Director
Frost Brown Todd LLC
Cincinnati, OH
(513) 651-6842
Ms. Mary Beth Naumann
Newsletter Editor
Jackson Kelly PLLC
Lexington, KY
(859) 806-6756
Newsletter Editor
Jackson Kelly PLLC
Lexington, KY
(859) 806-6756
Mr. Michael T. Papandrea
Special Projects Leader
Lowenstein Sandler LLP
Roseland, NJ
(973) 597-2500
Special Projects Leader
Lowenstein Sandler LLP
Roseland, NJ
(973) 597-2500