Zone of Insolvency

Zone of Insolvency

Eric Daucher (US)

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Supreme Court: Bankruptcy Code 363(m) does not limit appellate jurisdiction over sale orders

Posted in Uncategorized
On April 19, 2023, the US Supreme Court unanimously held that Section 363(m) of the Bankruptcy Code is not “jurisdictional,” and therefore does not limit a court’s authority to hear an appeal of a bankruptcy sale order (even if it does limit a court’s ability to void the sale itself). This ruling resolves a circuit… Continue Reading

Contagion liability risk in the United States and Australia for parent entities arising from the insolvency of a subsidiary

Posted in Australia, US
With the influx of insolvency cases expected on a global basis in coming months as government support measures are wound back, now is an opportune time for businesses to consider the extent of their potential exposure if a subsidiary liquidates. In particular, can losses be isolated within a liquidating subsidiary, or will there be a contagion… Continue Reading

SCOTUS Ends Structured Dismissals that Circumvent Priority Rules

Posted in US
Earlier today, in Czyzewski v. Jevic Holding Corp., the Supreme Court put an end to “structured dismissals” that allow a debtor to leave bankruptcy while circumventing the Bankruptcy Code’s creditor payment priority scheme. A Chapter 11 debtor generally has three options for exiting bankruptcy: (1) a confirmed plan of reorganization (or liquidation); (2) conversion to… Continue Reading

Think You Have a “Good Faith, for Value” Defense? Value to Creditors is the Key!

Posted in US
Fraudulent transfer statutes were enacted to protect creditors from improper depletion of a debtor’s assets.  They generally accomplish this goal by allowing creditors (or a bankruptcy estate representative) to avoid transactions that are either actually or constructively fraudulent as to creditors, and to recover some or all of the proceeds of the transaction.  For example,… Continue Reading

Third Time’s the Charm: Supreme Court May Finally Clarify Bankruptcy Courts’ Power

Posted in US
On January 14, 2015, the Supreme Court of the United States heard oral argument in Wellness International Network, Limited v. Sharif, a case that gives SCOTUS the opportunity to finally clarify the constitutional limits of bankruptcy courts’ decision-making power raised by its 2011 decision in Stern v. Marshall. But as we saw with last year’s… Continue Reading

Gavin v. Tousignant: A Refresher on How Bankruptcy Courts Interpret Officers’ and Directors’ Duties

Posted in US
Corporate officers and directors who want to understand when a bankruptcy court may second-guess their decisions if their company fails need look no further than the Delaware bankruptcy court’s recent decision in Gavin v. Tousignant (In re Ultimate Escapes Holdings, LLC). Failed Business, Failed Merger Ultimate Escapes was formed in September 2009 to operate a… Continue Reading

Arkison: A Supreme Dodge

Posted in US
On June 9, 2014, the Supreme Court handed down a decision in Executive Benefits Insurance Agency v. Arkison—a case that was expected to answer fundamental questions about the constitutional limits of bankruptcy courts.  The case had the potential to either dramatically reshape, or strongly reaffirm existing fraudulent transfer litigation law and practice.  Instead, in a… Continue Reading

Carney v. CitiMortgage, Inc. — Not Everything is a Stern Problem

Posted in US
Since the Supreme Court of the United States shook up the bankruptcy litigation world with its decision in Stern v. Marshall, bankruptcy practitioners have been finding “Stern problems” everywhere they look.  A straightforward decision in Carney v. CitiMortgage, Inc., however, reminds us that, as broad as Stern may be, bankruptcy courts retain full authority to… Continue Reading

Supreme Court Appears Ready to Limit Bankruptcy Court Power in Fraudulent Transfer Actions

Posted in Bankruptcy Courts
After January 14’s oral argument in Executive Benefits Insurance Agency v. Arkison, the big question appears to be not whether the Supreme Court will scale back bankruptcy court power over fraudulent transfer actions, but how drastic the new limitations will be.  Our previous discussions of Arkison appear here and here. Background The facts of Arkison are… Continue Reading

SCOTUS Will Hear Argument on Bankruptcy Court Authority in Fraudulent Transfer Litigation on January 14, 2014

Posted in US
As we discussed in a recent post on Executive Benefits Insurance Agency v. Arkison, the United States Supreme Court is preparing to address the constitutional limits on bankruptcy court authority in fraudulent transfer litigation. In granting certiorari in Arkison, the Supreme Court agreed to consider two questions: Can a bankruptcy court issue proposed findings of fact… Continue Reading