The Restructuring Report

Nearly five years after the enactment of the Small Business Reorganization Act, what are the emerging trends for Subchapter V cases?

Minnesota’s beer industry faces significant financial obstacles, but certain financial tools may allow craft breweries to weather the storm and ensure their survival.

Effective July 1, 2024, the applicable dollar amounts of certain Minnesota exemptions were increased, and effective August 1, 2024, Minnesota implemented significant changes to its exemptions.

Nearly 2 million nonprofits are registered with the IRS, and the National Center of Charitable Statistics reports that about 30% of nonprofits close within 10 years. How do directors and officers of nonprofits satisfy their fiduciary obligations when a nonprofit faces economic difficulties and insolvency?

Recent decisions in the Third Circuit, Fourth Circuit and Indiana bankruptcy court appear to implement an insolvency prerequisite for a debtor to commence a case under the Bankruptcy Code. What is the basis of the insolvency prerequisite and how will courts implement this prerequisite in the future?

When drafting a pleading, it is important to remember the applicable burden of proof and which party bears that burden. This is even more important in bankruptcy proceedings, as multiple provisions of the Bankruptcy Rules and Bankruptcy Code shift the burden of proof between parties. 

Minnesota recently legalized cannabis sale and use, creating a new legal industry almost overnight. Businesses in any new industry will necessarily face financial challenges, but with bankruptcy options limited for cannabis-related entities, can receivership law provide a mechanism for assisting these types of companies?

The Eighth Circuit became the most recent circuit to rule that avoidance causes of action are property of the bankruptcy estate and may be sold. How does this impact the practice of selling avoidance causes of action in both Chapter 7 and Chapter 11 cases? Does the Eighth Circuit’s decision open the door to the granting of a pre-petition security interest in avoidance causes of action?

A Florida bankruptcy court recently approved the first known Prepack Subchapter V plan. Can Prepacks work in Subchapter V? And what issues should practitioners be aware of?

The Purdue Pharma decision is just the latest case to address the constitutional and statutory authority for third-party releases in bankruptcy plans. Shortly thereafter, a New Jersey bankruptcy court dismissed LTL’s second attempt to commence a bankruptcy case using the Texas two-step. These cases and other recent decisions all focus on methods and tools to resolve complicated mass-tort matters in Chapter 11, which two professors recently argued is an appropriate tool to resolve these types of cases. 

Recent cases involving structured dismissals and the dischargeability of corporate debts in Subchapter V demonstrate the evolving nature of Subchapter V and its ability to remain an efficient and cost-effective process for small businesses.

With Chapter 11 bankruptcy filings on the rise in the first six months of 2023, including Subchapter V filings, it is important to understand the advantages and challenges of Subchapter V and its stream-lined reorganization process.

Two recent bankruptcy court opinions came to different conclusions on whether the liquidating trustee is obligated to make quarterly payments post-confirmation on disbursements from the liquidating trust.

When a business owner files an individual bankruptcy case, courts disagree on whether the owner’s personal guarantees of the business debt are discharged. A Wisconsin district court recently addressed this issue. What practical pointers can practitioners take from this recent decision and the rulings of other courts?

What steps should creditors take to best understand their rights and ensure they are as fully protected as possible both before and after a cryptocurrency bankruptcy case is filed.

As the cryptocurrency industry continues to face significant volatility and new bankruptcy cases are filed every day, what are some of the major issues bankruptcy practitioners and courts will need to address in the coming days?

A recent law review article analyzed the different categories of bankruptcy filers. What can bankruptcy practitioners use with that information and how can that information impact bankruptcy public policy?

When conducting a winddown of a business, should the business formally dissolve? What are the benefits and what are the risks when dissolving an entity?

The Supreme Court’s Siegel opinion found the U.S. Trustee’s temporary fee increase unconstitutional. What are the implications of the opinion?

Small businesses face ever-increasing financial distress from a number of different factors, including price inflation, supply chain issues, and workforce changes. How widespread are these issues and what will their impact be on small businesses in the future?  

The Ninth Circuit Bankruptcy Appellate Panel recently applied a totality of the circumstances test to determine what types of activities satisfy the core or historical operations requirement for debtors that are no longer operating.

For circuits that have Bankruptcy Appellate Panels, appealing parties must make a critical choice on appeal: do they elect to have their appeal heard by the Bankruptcy Appellate Panel or the District Court?

Shortly after the Southern District of New York ruled on third-party releases in the Purdue Pharma case, the District Court of the Eastern District of Virginia similarly overturned a plan containing third-party releases in the Ascena Retail Group bankruptcy case. How does this decision relate to the Purdue Pharma decision and what does it mean for the future of third-party releases?

Can a debtor include releases of non-debtor third parties in its chapter 11 plan? This divisive issue has been litigated before a number of different courts throughout the country. The Southern District of New York recently weighed in and reversed the confirmation of a plan containing third party releases. How does this recent decision impact the continued debate over third-party releases?

Some debtors are taking advantage of a Texas fraudulent transfer law that allows a company to transfer its debt to a Texas entity, which subsequently files for bankruptcy, and its assets to non-debtor entities, protecting the assets and eliminating the debt. What can creditors do about it?

When a case is administratively insolvent, can a trustee force estate professionals to disgorge compensation paid pursuant to a court’s order approving such compensation?

Third-party releases headline news stories about major chapter 11 cases, including Purdue Pharma and the Boy Scouts of America. Will Congress consider a bill that would restrict the use of third-party releases?

A recent court decision, Mendelsohn v. Roslyn, provides important lessons for pleading and proving fraudulent transfer claims.

Bankruptcy law is changing around the world, away from the liquidation model and toward the model of corporate rescue. Additionally, these changes reflect movement toward venue competition for the business of hosting international bankruptcy cases.

A recent case provides ten elements that courts and professionals may use to determine if vendors should receive critical vendor payments.

A number of lessons may be learned from representing clients in the bankruptcy filings in the retail and restaurant industries.

Prior to the COVID-19 pandemic, the Bankruptcy Code generally has been interpreted to require debtors to pay rent obligations on time under unassumed real property leases as those obligations arose post-filing and pre-rejection. This result was driven by 11 U.S.C. § 365(d)(3), which requires the debtor to “timely perform” all obligations until the lease is assumed or rejected, with one narrow exception.

As financial distress grows due to the pandemic, charitable organizations are faced with two immovable forces–increased demand from hard hit communities and decreased funding due to both the economic hardships facing many donors and the cancellation of most live fundraising events.

The most important part of the process is assessing the alternative methods to wind down a business, choosing the right approach and executing on the plan.

Reps and warranties insurance, which has become common in conventional M&A transactions, is now being marketed for use in distressed transactions, including 363 bankruptcy sales. How will that work and can it help facilitate a more robust and competitive sale process?

As Chapter 11 debtors have grappled with the SBA’s surprising anti-debtor stance, a promising strategy has emerged. This strategy does not make sense for every Chapter 11 debtor, but for those Chapter 11 debtors that need additional liquidity and otherwise qualify for a PPP loan, quick action may be necessary.

As COVID-19 continues to devastate the U.S. and local economies, the service industry in particular has experienced substantial declines in both business and profits. However, the new Subchapter V of Chapter 11 of the Bankruptcy Code and the CARES Act have provided service industry debtors with new and potentially life-saving tools to solve their unique debt issues moving forward.

It has been widely reported that the CARES Act increased the debt limit for small business bankruptcy cases under Subchapter V of Chapter 11, but how do small business bankruptcy cases differ from normal Chapter 11 cases and what are the benefits for small businesses?

Steps and strategies for trade vendors to protect themselves in the event a customer may file for bankruptcy during economic disruption.

Professionals should consider the traditional tools for helping troubled businesses but also explore non-traditional methods of solving client problems.

After Congress amended the Bankruptcy Code in 2019 to provide additional relief to farmers and small businesses, could Congress be poised to make yet another change to the Bankruptcy Code in 2020?

What is cryptocurrency? Bankruptcy practitioners and the courts better figure it out soon as the growth in popularity of cryptocurrencies continues to create new legal issues under the Bankruptcy Code.

Chapter 11 bankruptcy is an important and powerful tool to address financial challenges that a company and its decision-makers may be facing. While the process has its challenges, understanding the rights afforded and strategic advantages available through the Chapter 11 process is critical.

Congress recently passed the Family Farmer Relief Act of 2019 and the Small Business Reorganization Act of 2019, intended to make the Chapter 12 and Chapter 11 processes more accessible to family farming operations and small business debtors, respectively.

A recent Supreme Court decision resolves an important question regarding what rights a non-debtor licensee has to continue to use a trademark under a rejected lease and may also have broader ramifications on the rights of contract parties when a contract is rejected under Section 365.

In a case that may end up before the Supreme Court, the Second Circuit recently analyzed the extraterritorial application of the fraudulent transfer laws found in the Bankruptcy Code on transfers made outside the U.S. between transferors and transferees both located outside of the U.S.

In a recent decision, a gardening supply store was denied bankruptcy protection due to its business model, which targeted marijuana growers in states that have legalized its use.

After the Ninth Circuit in In re Taggart set a new and narrow precedent regarding exactly what a creditor must do in order to be subject to civil contempt sanctions for a violation of the discharge injunction, the ball is now with the U.S. Supreme Court to determine what influence that extraordinary opinion will have on other courts.

New dollar amounts for exemptions under the Bankruptcy Code took effect on April 1, 2019, and apply to all cases filed on or after that date. Ryan Murphy prepared a table that summarizes these updated Bankruptcy Code amounts and also compares the Bankruptcy Code exemptions with the Minnesota state-law exemptions.

The Southern District of Texas’s recent popularity in commercial filings, stemming from a number of factors, makes it a new contender to be one of the busiest commercial bankruptcy districts in the country.

In addition to the normal hurdles debtors face in chapter 11 cases, many energy and farmer debtors must address the safe harbor provisions of 11 U.S.C. § 556, which permit forward contract counterparties to terminate forward contracts immediately after a bankruptcy filing.

Jim Baillie conducted a joint interview of retired Bankruptcy Judge John Connolly and Mel Orenstein for the National Bankruptcy Archives.