Business Reorganization

Business Reorganization March 2022

A Potential Alternative to Approving Consensual Third-Party Releases: § 1141(a) of the Bankruptcy Code

The approval of third-party releases in connection with the confirmation of a debtor’s chapter 11 plan before a bankruptcy court has become increasingly controversial and the subject of several recent district court decisions. [1] At the insistence of nondebtor parties, third-party releases are often included in a plan of reorganization or liquidation to shield such parties from claims — related to the debtor, its business and/or the restructuring — brought by the debtor’s creditors, equity securityholders and other stakeholders.

Recent Interpretations of “Reasonable Due Diligence” Under Section 547(b)

In May 2021, the ABI Journal examined the recently-added “reasonable due diligence” requirement of 11 U.S.C. § 547(b), [1] with an in-depth analysis of how such a requirement may shift the burdens of proof assigned in 11 U.S.C. § 547(g). [2] Since the revision’s enactment, several courts have examined the new language, shedding light on what is required under this new standard in the real world.

Varieties of Mootness: Constitutional and Equitable Mootness After Sundaram and VeroBlue

The term “mootness” refers to a category of related precepts that preclude a reviewing court from reaching the underlying merits of a controversy. While questions dog this doctrine’s constitutional and prudential forms outside of the Bankruptcy Code’s ambit, few doubt either’s general validity. However, within bankruptcy’s periphery, more substantive questions abound. There, constitutional mootness’s recognizable form blurs, and the prudential doctrine dubiously known as equitable mootness resists pragmatic simplification.

How Subchapter V Trustees May Exercise Derivative Standing

When Congress passed the Small Business Reorganization Act of 2019 (the SBRA), [1] they made two important changes to chapter 11. [2] First, Congress created the subchapter V trustee. [3] Second, Congress eliminated the mandatory appointment of a committee of unsecured creditors. [4]

Business Reorganization December 2021

Avoid Falling into the “Check-the-Box” Trap When Working On or Planning For a Reorganization

There are so many involved details and items turnaround professionals have to deal with when they are brought in to help reorganize a company. It is very tempting to fall into a false sense of security when you can just check off the “got it” box without delving into a detailed analysis of complicated issues. Insurance is one of those deeply involved areas where professionals should not take the easy way out.

The Future of Bankruptcy Venue Reform

On June 28, 2021, a bipartisan bill was presented in the U.S. House of Representatives to amend 28 U.S.C. § 1408, the bankruptcy venue statute. The Bankruptcy Venue Reform Act of 2021, H.R.

Facilitating a Consensual Plan: The Role of the Subchapter V Trustee

11 U.S.C. § 1183(b)(7) tells us that “[t]he trustee shall ... facilitate the development of a consensual plan of reorganization.” The Small Business Reorganization Act of 2019 (Public Law 116-54) established for the first time in chapter 11 a mandatory, but nonpossessory trustee — the “subchapter V trustee” — to keep an eye on small business reorganizations under the new subchapter V of chapter 11 of the Bankruptcy Code.

Business Reorganization July 2021