Joining the Eighth and Ninth Circuit Courts of Appeals, the Fifth Circuit Court of Appeals recently held that a debtor or trustee can sell its avoidance actions to third-party, non-estate representatives. See Briar Capital Working Fund Capital, L.L.C. v. Remmert (In re South Coast Supply Company), No. 22-20536 (5th Cir. Jan. 22, 2024) (Dennis, J).
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Ninth Circuit Holds that Selling Peace Does Not Require Business Judgment
In Spark Factor Design, Inc., et al. v. Hjelmeset (In re Open Medicine Institute, Inc.), No. 22-60017 (9th Cir. Oct. 30, 2023), the Ninth Circuit Court of Appeals recently found that a bankruptcy court has discretion of whether to apply the standards under section 363(b) of the Bankruptcy Code in cases where a debtor’s sale of…
Recent Divergent Views on Third-Party Injunctions in Mass Tort Bankruptcies
A third-party injunction in a chapter 11 bankruptcy is generally used to protect a non-bankrupt entity from liability that is shared with, or derivative of, a bankrupt entity. Third-party injunctions are difficult to obtain in any bankruptcy setting, because bankruptcy laws are generally intended to protect debtors in bankruptcy, not non-debtor affiliates.
Increasingly, however, third-party…
SCOTUS Removes a Partial Barrier to Challenging Unstayed Bankruptcy Sales to Good-Faith Purchasers
In MOAC Mall Holdings LLC v. Transform Holdco LLC, 134 S.Ct. 927, 937 (2023), the U.S. Supreme Court recently resolved a debate that has long divided Circuit Courts throughout the U.S: whether section 363(m) of the Bankruptcy Code, a provision that is intended to protect good-faith purchasers of bankruptcy assets, imposes a jurisdictional barrier to a…
Maybe We Should Call It Cryptic Currency?
Notwithstanding that cryptocurrency is generally in the cloud, crypto purists will say that cryptocurrency is as valuable as dollar bills. However, the recent bankruptcy filings of five major crypto companies, including Celcius Network LLC (a lender) and FTX Trading Ltd. (an exchange), may bring to light the real nature of cryptocurrency; whether it’s an investment,…
The Debate Over Make-Whole Provisions Continues in the Fifth Circuit
In re Ultra Petroleum Corporation is one case that has caused the Fifth Circuit Court of Appeals to revisit the permissibility of Make-Whole provisions, at least three times, over several years. Earlier discussions of the case have been the subject of prior CRR articles. See Fifth Circuit Holds that Chapter 11 Plan Does not “Impair&rdquo…
A Tale of 4 Cities: How Different Jurisdictions Recently Address Third-Party Releases
Intro
The ability of a chapter 11 going-concern debtor to be discharged from its prepetition liabilities is common place and not controversial. 11 U.S.C. § 1141(d). However, the ability of a debtor to release third-party non-debtors from their own liabilities has sparked much debate, because, among other things, the Bankruptcy Code does not clearly or…
Weinstein Case Demonstrates Difficulties in Following Complex Bankruptcy Sales
Everyone is likely familiar with the chapter 11 bankruptcy of The Weinstein Company (“”TWC“), an former film and production studio that previously produced and distributed featured films and premium television content internationally. On March 19, 2018 (the “Petition Date“), TWC was forced to file bankruptcy following numerous claims of private misconduct against its co-founder, Harvey…