That was Quick: California Court Holds that the SBRA can be Applied Retroactively

The Small Business Reorganization Act of 2019 (“SBRA”) became effective on February 19, 2020, after being enacted by Congress at blazing speed.  Indeed, the legislation was first introduced into the House of Representatives on June 18, 2019, was received by the Senate on July 24, 2019 and was signed by the President on August 23, […]

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Fourth Circuit Distinguishes LLC Membership Interests from Economic Interests in a Security Agreement Conveyance

In Wells Fargo Bank, N.A., f/b/o Jerome Guyant, IRA v. Highland Construction Management Services, L.P. et al., Nos. 18-2450-52 (4th Cir. March 17, 2020), the Fourth Circuit Court of Appeals recently upheld that a borrower’s indirect economic interests in a limited liability company (LLC) were not assigned to a lender under a conveyance in a security […]

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Mississippi Court Joins Majority of Courts Finding that Setoff Rights Survive Plan Confirmation

Setoff is a right that allows a creditor to offset a prepetition debt owed to a debtor with its prepetition claim against the debtor.  See In re Luongo, 259 F.3d 323, 334 (5th Cir. 2001).  This remedy is aimed at preventing the inequitable and inefficient result that occurs when a creditor is forced to pay […]

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Court Denies the Filing of Class Action Proof of Claim in PG&E’s Bankruptcy

Bankruptcy and class actions each establish elaborate procedures and provide a convenient forum to resolve numerous claims against one or more defendants, in an efficient manner.  However, while a class action focuses on providing adequate representation to claimants with similar claims, bankruptcy focuses on enabling an insolvent company to reorganize.  The two goals do not […]

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Small Business Reorganization Act of 2019 (SBRA) is Effective

The Small Business Reorganization Act of 2019 (“SBRA“) is in effect as of yesterday, February 19, 2020.  The SBRA was enacted to provide smaller business debtors with a more streamlined path to restructuring their debts.  Below are some highlights of the new law. Absolute-Priority Rule The SBRA exists today, in large part, because small businesses […]

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Seventh Circuit Holds that Reclamation Claims are Statutorily Subordinate to Prior Floating Liens on Inventory

In Whirlpool Corporation v. Wells Fargo Bank, N.A., et al. (In re hhgregg, Inc.),  No. 18-3363 (7th Cir. Feb. 11, 2020), the Seventh Circuit Court of Appeals recently held that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA“) created a federal priority rule rendering a secured lender’s first-priority, floating liens on inventory […]

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