Too Close for Comfort? LATAM Judge Upholds $1.3 Billion in Intercompany Loans


A decision earlier this year in the LATAM Airlines Group bankruptcy addressed the validity of claims arising from intercompany loans between a corporate debtor’s affiliates.  Judge James L. Garrity’s opinion overruling objections to the claims provides helpful guidance on an issue that often gives rise to disputes in chapter 11 cases.


What Inquiring Minds Should Have Known – Second Circuit Ruling on Inquiry Notice Saves Citibank from $900 Million Payment Mistake


A recent decision by the Second Circuit Court of Appeals has saved Citibank from the ramifications of an internal error that could have cost it nearly $900 million.  Although the recipients of an unintended transfer of Citibank’s funds could have reasonably believed that they were receiving early payment on a loan and had no actual knowledge that the payment


Nobody’s Default? Ninth Circuit to Decide Whether Defaults Need to be ‘Material’ Before Landlords Get Adequate Assurance Under the Bankruptcy Code


Section 365 of the Bankruptcy Code allows debtors to “assume” unexpired leases, recommitting themselves and their counterparties to the existing lease terms, subject to approval by the Bankruptcy Court.  If there are existing defaults under the lease, section 365(b) appears to require that the debtor provide the counterparty with adequate assurance of prompt cure of defaults, compensation for losses resulting from the defaults, and adequate assurance of future performance under the lease, ensuring that the landlord enjoys the full benefit of its bargain going forward.


No Honor Among Creditors: Delaware Judge Issues Important Ruling On “Uptier” Transaction


Intercreditor disputes in bankruptcy are common.  Typically, however, they center around predictable disagreements between senior or junior classes of creditors such as valuation battles or lien perfection challenges.  A recent decision in the Delaware chapter 11 case of TPC Group has highlighted a new trend of “intra-creditor class warfare,” involving, in the understated words of


Ten Years Gone – Delaware Bankruptcy Judge Rejects Effort to Extend Lookback Period for Avoidance of Pre-Bankruptcy Transfers


A recent decision by Delaware Bankruptcy Judge John Dorsey will limit the ability of bankruptcy trustees to expand the lookback period for avoiding pre-bankruptcy transfers beyond the four years provided under most state law fraudulent conveyance statutes.  In dismissing a trustee’s action to recover transfers made more than four years prior to the commencement of the bankruptcy case, Judge Dorsey rejected the trustee’s effort pursuant to


Second Circuit Split Resolved: No PPP Loans for Debtors in Bankruptcy


In March, the U.S. Court of Appeals for the Second Circuit joined a growing majority of courts with Springfield Hospital, Inc. v. Administrator for the U.S.


Preoccupied Congress Fails to Act, Sending Debt Limit Back Down to $2.7 Million and Reducing Availability of Subchapter V Protection for Small Businesses


For now, the Subchapter V debt limit is back down to $2.7 million.  Overshadowed by the contentious confirmation hearings for historic Supreme Court nominee Ketanji Brown Jackson, the Senate Judiciary Committee failed to act on proposed legislation that would have made permanent the increased $7.5 million debt limit and allowed more small businesses to file for bankruptcy protection under Subchapter V of Chapter 11.  Because of this congressional inaction, the legislation that temporarily increased the debt limit to $7.5 million expired on March 27, 2022.


Does a Declaration of Independence Suffice? A New Study Raises Significant Questions About “Independent Directors” of Large Distressed Companies


A paper to be published soon in the University of Southern California Law Review, “The Rise of Bankruptcy Directors,” is sharply critical of the increased use of supposedly “independent directors” by distressed companies, often in anticipation of filing for bankruptcy, and the related adverse impact on creditor recoveries.  Although the appointment of what the authors, Jared A.


$7.5 Million Increased Debt Limit For Small Business Debtors May Become Permanent


The law that temporarily increased the maximum amount of debt a company may have to qualify as a small business under Subchapter V – the cheaper, easier, and faster version of Chapter 11 – from $2.7 million to $7.5 million, is about to expire.  A bill introduced in the Senate this week by a bipartisan group of senators led by Senator Chuck Grassley (R-Iowa), however, would make the $7.5 million debt limit permanent.


Driving While Unimpaired – Delaware Judge Issues Important Ruling in Hertz Chapter 11 Case on Allowance of Make-Whole Premiums, Treatment of Unimpaired Creditors, and Postpetition Interest (Part 2)


The allowance of postpetition interest in solvent debtor chapter 11 cases has become an important issue in recent years for corporate issuers, bondholders and other creditors.  This post will examine a recent decision in the Hertz case by Judge Mary Walrath of the U.S.