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 1)


The treatment of make-whole premiums in chapter 11 cases in solvent debtor cases has become an important issue in recent years for corporate issuers and bondholders.  This post will examine a recent decision in the Hertz case by Judge Mary Walrath of the U.S. Bankruptcy Court for the District of Delaware on the allowance of such claims.  (Judge Walrath also addressed other topics in her decision pertaining to the treatment of unimpaired creditors and postpetition interest, which will be examined in a separate post.)


Beware of Post-Confirmation Bar Dates In Chapter 11 Plans


A recent decision reminds creditors of the harsh consequences of failing to comply with a court imposed deadline for filing claims in a bankruptcy case. The U.S. Court of Appeals for the Third Circuit recently held in Ellis v. Westinghouse that claims accruing after confirmation of a chapter 11 plan, but  before the plan goes effective, are subject to the administrative claim deadline established by the plan.


Two Important Rulings on Payment of Indenture Trustee Fees in Chapter 11 Cases


Two recent judicial decisions, Sanchez Energy and Tribune Media, highlight the challenges faced by indenture trustees and their professionals in chapter 11 cases where there are no recoveries to noteholders. 


The Devil’s Triang(ular Setoff), Revisited – Third Circuit Affirms Denial of Corporate Parent’s Attempt to Set Off Debt Owed to Subsidiary


The U.S. Court of Appeals for the Third Circuit recently became the first circuit court to address the question of whether a corporate parent can set off an obligation that it owes to a bankrupt company against a claim owed by such company to the parent’s subsidiary. A couple of years ago, in the chapter 11 case of Orexigen Therapeutics in the District of Delaware, former Bankruptcy Judge Kevin Gross denied a motion to allow such a “triangular” setoff.


If the Shoe Fits . . . . Defendants in Nine West D&O Litigation Fail to Convince Judge to Dismiss Claims for Breach of Fiduciary Duty and Recovery of Fraudulent Transfers


A recent decision by Judge Jed Rakoff of the Southern District of New York highlights the risks faced by directors and officers of companies in financial distress who fail to undertake properly their duties to the company and its stakeholders.


Commercial Landlords Take Note – COVID Relief Bill Contains Important Bankruptcy Code Amendments


The much-ballyhooed COVID relief bill passed by Congress at the end of last year, in addition to providing for $600 checks to millions of people, includes several COVID-related amendments to the U.S. Bankruptcy Code. Some of these changes will have a significant direct impact, at least temporarily, on the rights of commercial landlords and tenants in chapter 11 cases.


New York Court of Appeals Splits From Second Circuit on Minority Bondholders’ Rights in Out of Court Restructurings


The New York Court of Appeals recently handed down an important opinion on out of court restructurings involving bond debt. In CNH Diversified Opportunities Master Account, L.P., v. Cleveland Unlimited, Inc., the Court of Appeals, in a 4–3 ruling, diverged from the Second Circuit’s ruling a few years ago in Marblegate Asset Mgt., LLC v Education Mgt. Fin. Corp. and resuscitated rights of minority bondholders under the Trust Indenture Act which were limited under Marblegate.


Podcast: Bankruptcy During COVID-19 Pandemic


2020 is on pace to set a record as the busiest year for bankruptcy filings since the Great Recession.  In this episode on Kelley Drye Legal Download podcast, Bankruptcy and Restructuring Partner Bob LeHane and Special Counsel Jennifer Raviele discuss the current state of retail and restaurant bankruptcy cases, the impact of the global pandemic, and what to expect in the future.


COVID-19: “Avoiding” Harm to Corporate Good Samaritans


The impact of COVID-19 is being felt at all levels of the economy and will work its way through bankruptcy courts for years to come.  In these early days, many creditors who are themselves suffering are providing assistance to troubled companies.  Suppliers and commercial landlords are agreeing to various forms of relief, including modified credit terms and rent relief to allow customers to bridge this period of unprecedented disruption.  While these corporate goo


Third Circuit Ruling on Constitutional Authority of Bankruptcy Courts Can Provide Guidance for the Looming Wave of COVID-19 Cases


The economic fallout from the COVID-19 pandemic will leave in its wake a significant increase in commercial chapter 11 filings. Many of these cases will feature extensive litigation involving breach of contract claims, business interruption insurance disputes, and common law causes of action based on novel interpretations of long-standing legal doctrines such as force majeure.