In what could likely end up an influential ruling, a Delaware court recently held that securing a “critical vendor” status in Chapter 11 commercial bankruptcy case ultimately offers no defense in situations where the vendor later faces legal action for the recovery of preferential payments that the debtor recoups shortly before bankruptcy. The Role of…

The Issuers of Stock Held Liable for Double-Pledge A Louisiana bankruptcy court, in the Karcredit LLC case, recently considered a case involving two lenders and one stock certificate. At the heart of the Karcredit case was a party who relied on a stock certificate to satisfy loan duties owed to another party. After a replacement…

Under the US Bankruptcy Code, various powers are granted to debtors, creditors, and other parties involved with the bankruptcy process. One such power is found in section 544, which grants individuals the ability to avoid some interactions with bankruptcy trustees or debtors-in-possession. Questions, however, have lingered about whether  avoidance powers can only be exercised when…

Bankruptcy courts have long been overwhelmed with the question of how to apply sovereign immunity. The United States Supreme Court has issued some rulings about sovereign immunity, but has yet to write a definitive ruling about the issue. As a result, no definitive rulebook exists for how lower courts should interpret sovereign immunity issues. One…

Contracts Non-Executory A New Jersey Bankruptcy Court recently rejected a motion to deny a written agreement  in accordance with Bankruptcy Code section 365. The court held that a court’s request of specific performance made under a contract was non-executory and non-rejectable. The following examines the potential repercussions of this case, the role of section 365,…

Make it Easier to Navigate. The number of bankruptcy cases in the last few years has risen substantially, which has led many people to consider bankruptcy as a method of taking control of debts. While the COVID-19 pandemic impacted countless workers, hotel owners and workers have been some of the most negatively impacted. This is…

One fundamental aspect of bankruptcy law is that debtors can receive new starts on establishing good credit after emerging from the bankruptcy process. A company’s capacity to discharge liabilities is one of the primary motivators for pursuing protection under Chapter 11 bankruptcy. Consequently, it should come as no surprise that ensuring necessary steps are taken…

Potential Changes How Student Loan Debt is Handled Advocates are currently urging the United States Supreme Court to provide clarification about what debtors must establish to eliminate student loan debt in bankruptcy. Erasing student loan debt through bankruptcy is almost always difficult to do. Bankruptcy courts require a high standard of “undue hardship” to be…

In April, a bankruptcy court entered a judgment in favor of a national bank, determining that the plaintiff had failed to establish that he had experienced an injury involving economic or emotional distress damages due to the lender’s violations. During Chapter 13 bankruptcy proceedings, the plaintiff initiated legal action against the bank and a loan…

Many reorganizations plan involve the release of non-debtor liability, but there are varied opinions about the role of these releases. While releases of non-debtor liability are attractive to parties like directors and officers, others argue that releasing non-debtor is against the intent of the Bankruptcy Code.  Due to these conflicting perspectives, a current split exists…