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The Federal Rules of Civil Procedure were amended in 2015 and explicitly adopted the concept of proportionality:

Statements made during mediation are privileged and confidential — right? In the context of federal bankruptcy proceedings, the answer is not so simple. Some practitioners will be surprised to learn that there is no such thing as a federal “mediation privilege.” The mediation privileges that most practitioners are familiar with are actually creatures of state law. But when it comes to bankruptcy proceedings, there are no such federal, statutory equivalents.

On June 2, 2017, the Fifth Circuit Court of Appeals issued its decision in Asarco LLC v. Montana Resources Inc., affirming an order on appeal from the U.S. District Court for the Southern District of Texas.

Bankruptcy practitioners across the circuits understand these categories of adversary proceedings or contested matters, involving state law claims, that could potentially be subject to bankruptcy jurisdiction: core and non-core proceedings.[1]  For core proceedings, a bankruptcy court may enter “final” orders and judgments.[2]

In the recent spate of energy-related bankruptcy cases, restructuring efforts have focused on the underlying business economics — debt-for-equity swaps, rejection of gathering agreements, lease and contract rejections to improve operational efficiencies, and similar efforts. To date, however, many of the cases largely have ignored environmental issues and claims.

The rise in energy-sector bankruptcies has brought the question of whether oil and gas conveyances can be assumed or rejected under § 365 of the Bankruptcy Code to the surface. Issues related to assumption and rejection are particularly difficult in the energy sector because “[t]raditional property concepts are difficult to apply in the oil and gas context. Can one be said to ‘own’ something that is not necessarily quantifiable and to which one’s neighbor can gain legal title by ‘capture’?” [1]