The restructuring industry held its proverbial breath following the Supreme Court’s decision in Harrington v. Purdue Pharma L.P., which invalidated the nonconsensual third-party release in the debtors’ plan. While various courts continue to interpret the Purdue Pharma decision, New Jersey Bankruptcy Courts (the “Bankruptcy Court”) appear unified in allowing consensual third-party releases and finding that
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The Impact of Purdue Pharma
It has been approximately two months since the highly anticipated Supreme Court decision in Harrington v. Purdue Pharma L.P., and it is already making a significant impact in bankruptcies around the country.
In September 2019, Purdue Pharma L.P. and 23 affiliated debtors filed for chapter 11 bankruptcy to provide a breathing spell from the mounting…
New Jersey Releases New Chapter 11 Complex Procedures and Other Rule Updates
Pursuant to the New Jersey Bankruptcy Court’s (the “Court”) annual rule making cycle, the Court implemented various changes to the New Jersey Local Rules and Local Forms, which became effective on August 1, 2024.[1]
Of particular note, the Court has released an entirely new set of Chapter 11 Complex Case Procedures. …
The Circuit City Landmine Redux, the Final Word (Office of the United States Trustee v. John Q. Hammons Fall 2006, LLC): Supreme Court Holds that Chapter 11 Debtors Do Not Get a Refund on U.S. Trustee Quarterly Fees Under Unconstitutional Fee Increase
As previously discussed and anticipated in prior blog posts,[1] the United States Supreme Court’s decision in Siegel v. Fitzgerald, 596 U.S. 464, 142 S.Ct. 1770, 213 L.Ed.2d 39 (2022), which struck down as unconstitutional the United States Trustee System Fund (Pub. L. 115-72, Div. B, 131 Stat. 1229) (the “2017 Act”) on the basis…
Who’s a Party in Interest? The Supreme Court’s Ruling in Truck Insurance Exchange v. Kaiser Gypsum Co. Inc. Opens the Door for Insurers to Intervene in Certain Bankruptcy Proceedings
Kaiser Gypsum Company Inc. and Hanson Permanente Cement, Inc. (collectively, the “Debtors”), manufacturers of asbestos-containing cement products, filed for chapter 11 bankruptcy on September 30, 2016 (“Petition Date”) in the United States Bankruptcy Court for the District of Western District of North Carolina (“Bankruptcy Court”) after being named in more than 38,000 asbestos-related lawsuits since…
The More Things Change, the More They Stay the Same? Survival of Small Businesses Again Dependent on Action From Congress
Right now, a business with less than $7.5 million in debt can file an easier, cheaper, and more efficient bankruptcy than a traditional Chapter 11. That privilege will soon be limited to businesses with less than around $3 million of total debt unless Congress acts before June 21, 2024. This is not the first time…
Assignments for the Benefit of Creditors – an often-overlooked state law alternative to Chapter 7 bankruptcy
by Magdalena Schardt
For some folks the three letters ABC are a reminder of elementary school and singing a song to learn the alphabet. For others, it is a throw back to the early 70’s when the Jackson Five and its lead singer Michael, still with his adolescent high voice, sang a catchy love song. …
Mediation in Bankruptcy: A Glimpse
If you were a party to a lawsuit or a contested matter in a bankruptcy proceeding, would you be interested in working towards settlement with the assistance of an impartial third party, that is, a mediator, rather than take on the significant cost of litigation and going to trial? More and more parties in bankruptcy…
Are Gate-keeper Provisions in Chapter 11 Confirmation Orders a Stopgap for Nonconsensual Third-Party Releases?
As many bankruptcy practitioners are aware, there is a circuit court split with respect to the allowability of non-consensual third-party releases. Notably, in the Purdue Pharma case, the United States Court of Appeals for the Second Circuit held that bankruptcy courts have the authority to approve plans with non-consensual releases of direct third-party claims against…
What level of “reasonable due diligence” is actually required under Section 547(b) and does it really matter?
As bankruptcy attorneys who often defend clients in preference avoidance actions, we were pleased with the 547(b) amendments, effective as of February 20, 2020, requiring a trustee to conduct some level of due diligence into affirmative defenses before commencing a preference avoidance action. The amendment states “the trustee may, based on reasonable due diligence in…