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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Delaware Court Holds Enforcement of Intercreditor Agreement Does not Breach Duty of Good Faith and Fair Dealing

In LNV Corporation v. Ad Hoc Group of Second Lien Creditors (In re La Paloma Generating Company, LLC, Adv. Pro. No 19-50110 (JTD) (D. Del. January 13, 2020), a Delaware bankruptcy court recently held that actions taken by a senior secured creditor to enforce its rights under an intercreditor agreement did not constitute a breach of […]

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Fifth Circuit Restricts Double Recovery in Fraudulent Transfer Action

The laws of preferential and fraudulent transfers under the Bankruptcy Code can often seem theoretical and formulaic. When certain boxes are checked, it appears, at first blush, that a pre-bankruptcy transfer can be avoided, regardless of any intent or surrounding circumstances. However, in Whitlock v. Lowe (In re Curtis DeBerry), Case No. 18-50335 (5th Cir. […]

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New Jersey District Court Holds that No Evidentiary Hearing is Necessary to Appoint Chapter 11 Trustee

In MicroBilt Corporation v. Ranger Specialty Income Fund, L.P. et al. (In re Princeton Alternative Income Fund, LP), Case No. 3:18-CV-16557 (D.N.J. Nov. 27, 2019), the District Court for the District of New Jersey recently affirmed a bankruptcy court’s decision to appoint a chapter 11 trustee, without conducting a traditional evidentiary hearing.  The holding reinforces that […]

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5th Circuit Upholds Subordination of Deemed Dividends Under Section 510(b)

In In re Linn Energy, LLC, 2019 WL 4149481 (5th Cir. Sept. 3, 2019), the Fifth Circuit recently reminded us that if a debt instrument looks like a security and quacks like a security, it likely is a security for purposes of subordination under section 510(b) of the Bankruptcy Code.  The implications of characterizing an instrument […]

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