5th Circuit

Debt of an Ineligible Affiliate Is Included in the $7.5 Million Cap for Subchapter V

Although ineligible on its own to be a debtor under subchapter V of chapter 11, the debt of the ineligible company is nonetheless aggregated with the debts of its affiliates to determine whether affiliates are eligible for subchapter V.

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Mississippi Northern District

Mississippi

Judge Isgur Sides with the Third Circuit and Allows Makewhole Premiums

Creditors are entitled to ‘default interest’ when the debtor is solvent.

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Houston Judge Rejects Tenth Circuit Opinion Immunizing Subsequent Transferees

Proceeds from fraudulently transferred property can be recovered from subsequent transferees, Judge Rodriguez says, differing with the Tenth Circuit’s Generation Resources opinion.

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Fifth Circuit Allowed an Extension of the Discharge Deadline After the Deadline Had Passed

The equitable power under Section 105(a) permits extending the discharge objection deadline when the court makes a mistake.

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Texas Mineral Liens May Be Modified in a Subchapter V Cramdown Plan

A cramdown plan can reduce the collateral coverage for secured creditors.

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Fifth Circuit Again Says: No ‘Futility Defense’ Under the Texas UFTA

Following the answer by the Texas Supreme Court to a certified question, the Fifth Circuit again rules that an inability to discover fraud won’t absolve a transferee from the duty to investigate suspicions of fraud.

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‘13’ Plans Already in Default on March 27 May Be Extended Under the CARES Act

Judge Grabill finds nothing in Section 1329(d) to preclude extending the duration of a plan if payments were already in default when the CARES Act was enacted on March 27.

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Louisiana Eastern District

Louisiana

Surety Bonds Aren’t Executory Contracts and Can’t Be Assumed Even if They Are

Insurance companies must nail down the treatment of performance bonds before plan confirmation.

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Louisiana

Caution: Trusts Under a Plan Might Dissolve Automatically If Not Extended

Language in the documents prevented trusts from dissolving automatically when the trustee missed a deadline for extending the duration of the trusts, Judge Isgur said.

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