Corporate Restructuring Review | Flight. 21 No. 3 | May–June 2022 – Insolvency/Bankruptcy


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In this problem:

The Fifth Circuit looks at sales of bankrupt assets free and clear of leasehold interests

Until 2022, only two federal appeals courts had weighed in on whether real estate could be sold bankrupt free and clear of a leasehold interest. In Precision Industries, Inc. v. Qualitech Steel SBQ, the Seventh Circuit ruled in 2003 that a real estate lease can be extinguished in a frank and clear bankruptcy sale. In its 2017 decision in In re Spanish Peaks Holding II, LLC, the Ninth Circuit essentially endorsed that position, with some caveats. The Fifth Circuit is the last circuit court to consider this issue, but indirectly. In In re Royal Street Bistro, LLC, 26 F.4th 326 (5th Cir. 2022), the court denied certain tenants’ motion for a writ of mandamus directing a district court to issue a stay pending appeal of a court order of bankruptcy approving the sale of leased real estate upfront and clear of tenants’ leasehold interests. However, the Fifth Circuit endorsed the result reached by the lower courts, but cautioned the courts against “light-hearted acceptance
Qualitechreasoning and textual exegesis.” [read more .

Clear Line Rule: No Changes to Chapter 11 Plan Substantially Consumed

In In re Northeast Gas Generation, LLC, 2022 WL 828263 (Bankr. D. Del. Mar. 18, 2022), the U.S. Bankruptcy Court for the District of Delaware denied the petition of a secured creditor who under a confirmed Chapter 11 plan has received 100% of the reorganized debtor. own funds as well as the reinstated debt for “reconsideration” of the amount of its guaranteed claim. The court held that, despite characterizing the relief it sought as a reconsideration of a claim, the secured creditor was attempting to alter a substantially consummated plan, which is prohibited by Code section 1127(b) bankruptcy, even if the proposed changes would not have a “material and negative” impact on the other stakeholders.
[read more . ]

Delaware Bankruptcy Court Rejects Use of Tax Code Lookback Period in Annulment Action

In In re J&M Sales Inc.2022 WL 532721 (Bankr. D. Del. Feb. 22, 2022), the U.S. Bankruptcy Court for the District of Delaware denied a Chapter 7 trustee’s motion to amend its complaint in an avoidance action to use the ‘Internal Revenue Service as “predicated creditor” or “trigger” because the IRS had not filed a proof of claim in the bankruptcy case and the existence of a payroll tax debt prior to the petition , which was paid under a “first-day motion”, was not sufficient to treat the IRS as a creditor. [read more . ]

Florida District Court: Foreign debtor need not have U.S. residence, assets, or place of business to be eligible for Chapter 15 recognition

In In re Talas Qais Abdulmunem Al Zawawi2022 WL 596836 (MD Fla. Feb. 28, 2022), appeal lodgedNo. 6:21-cv-00894-GAP (MD Fl. Mar. 30, 2022) the U.S. District Court for the Intermediate District of Florida recently upheld a bankruptcy court ruling that Chapter 15 has its own eligibility requirements and that the debtor eligibility requirements in cases under other chapters of the Bankruptcy Code do not apply in cases under Chapter 15. [read more . ]

Fifth Circuit Rules That Chapter 11 Debtors Can Reject Filed Rate Contracts Without FERC Permission

In FERC v. Ultra Resources, Inc. (In re Ultra Petroleum Corp.)2022 WL 763836 (5th Cir. March 14, 2022), the United States Court of Appeals for the Fifth Circuit ruled that a bankruptcy court properly authorized Ultra Resources, Inc. (“Ultra”) to dismiss a contract gas transmission tariff filed under its Chapter 11 plan without obtaining Federal Energy Regulatory Commission (“FERC”) approval, that Ultra was not subject to a separate public law obligation to pursue performance under the rejected contract, and that Section 1129(a)(6) of the Bankruptcy Code does not require a bankruptcy court to seek FERC approval before confirming a Chapter 11 plan providing rejection of the contract. [read more . ]

worthy of interest

Corinne Ball(New York), Bruce Bennet(Los Angeles and New York), Carl E.Black(Cleveland), Jeffrey B. Ellman(Atlanta), Brad B. Erens(Chicago), Gregory M. Gordon(dalas), Heather Lennox(Cleveland and New York), Joshua M.Mester(Los Angeles), Charles M. Oellermann(Columbus)and Kevin D. Orr(Washington) were part of the 2022 Lawdragon 500 Top US Bankruptcy and Restructuring Lawyers.

Bruce Bennet(Los Angeles and New York), Heather Lennox(Cleveland and New York), Corinne Ball(New York)and Ben Larkin(London) have been categorized into the Bankruptcy/Restructuring or Restructuring/Insolvency practice areas in Global Chambers 2022.

Roger Dobson(Sydney) has been classified in the Restructuring/Insolvency practice area in the 2022 edition of the Asia-Pacific Rooms.

On April 29, 2022, Gregory M. Gordon(dalas) was part of a panel discussion on “Texas Two-Step of Tort Liability (J&J)” at the American Bankruptcy Institute’s Spring 2022 Annual Meeting in Washington, DC.

Oliver S. Zeltner(Cleveland)guest lectured at Harvard Business School in a class on the City of Detroit Chapter 9 Bankruptcy Case on April 8, 2022.

On April 27, 2022, Kevin Orr(Washington) spoke at a panel following the public premiere of the award-winning documentary “Gradually, Then Suddenly: Detroit Bankruptcy.” The film opened the Freep Film Festival and was a sold-out screening at the Detroit Institute of Arts. The documentary won the 2021 Library of Congress Lavine/Ken Burns Award for Film.

Fabienne Beuzit(Paris) was named a “next generation partner” in the area of ​​insolvency practice in the 2022 edition of The Legal 500 EMEA.

Olaf Benning(Frankfurt)participated in Handelsblatt’s annual conference on restructuring, held May 11-13, 2022 in Frankfurt, Germany.

On May 23, 2022, Carl E.Black(Cleveland) and T. Daniel Reynolds(Cleveland)participated in a panel discussion at the William J. O’Neill Great Lakes Regional Bankruptcy Institute sponsored by the Bankruptcy and Commercial Law Section of the Cleveland Metropolitan Bar Association. Marissa Alfano(Cleveland) was a member of the event planning committee.

An article written by Corinne Ball(New York) titled “Seventh Circuit Permits Prior Interest Holder To Challenge ‘Free and Clear’ Sale After the Fact” was published in the April 27, 2022 edition of the New York Law Review.

Corporate Restructuring Review May-June 2022.PDF

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

POPULAR ARTICLES ON: Insolvency/Bankruptcy/Restructuring from the United States

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The Wall Street Journal reports that Pennsylvania-based Armstrong Flooring Inc. filed for Chapter 11 bankruptcy relief in Delaware on May 8, 2022, citing supply chain disruptions. ..


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