As the nation hunkers down to combat the novel coronavirus (COVID-19), bankruptcy courts throughout the country have moved quickly to implement procedures to preserve access to the courts while limiting in-person interaction during the crisis.  Each court’s specific COVID-19 procedures
Continue Reading COVID-19: Modified Bankruptcy Court Procedures

Social distancing.  Elbow bumps.  Flatten the curve.  These are the new phrases and behaviors we have learned to avoid exposure to the novel coronavirus (COVID-19).  This epic struggle forces us to reexamine and reevaluate our daily habits, lifestyles and customs as we work collectively to minimize the harm to our families, friends and neighbors throughout the United States.  While some of the lifestyle changes and limitations will be temporary, the human and economic effects of COVID-19 will be profound and, as always, the disruption undoubtedly will lead to increased innovation and societal change.

In the restructuring arena, many effects are direct and foreseeable.  Workers and businesses in the travel, restaurant, retail, hospitality and gaming industries will be immediately and severely challenged as their customers choose or are forced to stay home. The Centre for Aviation reports that without a significant government bailout, several major airlines will be bankrupt by mid-May.  Government mandated shopping center and restaurant closures will exacerbate the already severe challenges facing the retail industry, and disruptions in the global supply chain create inventory pressures for retailers and manufacturers alike.  And, as employees suffer reductions in the work-force, reduced income, medical debt and stock market losses, discretionary spending will decrease.  Regardless of whether you were bullish or bearish on 2020 last week, the financial impact of COVID-19 will be real and undeniable.

Continue Reading A Season of Viral Disruption

The Supreme Court this week resolved a long-standing open issue regarding the treatment of trademark license rights in bankruptcy proceedings. The Court ruled in favor of Mission Products, a licensee under a trademark license agreement that had been rejected in
Continue Reading Mission Products v Tempnology – Supreme Court Declines to “Vaporize” Licensee’s Rights Under Rejected Trademark License Agreement

Few issues in bankruptcy create as much contention as disputes regarding the right of setoff. This was recently highlighted by a decision in the chapter 11 case of Orexigen Therapeutics in the District of Delaware.  Judge Kevin Gross denied a
Continue Reading The Devil’s Triang(ular Setoff) – Delaware Judge Rejects Corporate Parent’s Attempt to Set Off Debt Owed to Subsidiary

The judicial power of the United States is vested in courts created under Article III of the Constitution. However, Congress created the current bankruptcy court system over 40 years ago pursuant to Article I of the Constitution rather than under
Continue Reading Square Peg / Round Hole – The Supreme Court and the Constitutional Authority of U.S. Bankruptcy Courts

The Supreme Court recently heard arguments in a patent dispute case, Oil States Energy Services, LLC v. Greene’s Energy Group, LLC.  Although the case has nothing to do with bankruptcy law, its outcome could have a substantial impact on
Continue Reading A Patent Law Dispute Before the Supreme Court This Term Could Have a Major Impact on U.S. Bankruptcy Courts

In December 2015, U.S. Bankruptcy Court Judge Laurie Silverstein of the District of Delaware confirmed a plan of reorganization in the Millennium Lab Holdings chapter 11 case that included the non-consensual release of certain claims against various non-debtor third parties. 
Continue Reading Judge Silverstein’s Opinion in Millennium Lab Holdings Threatens to Bring Clarity and Common Sense to Debate Regarding Constitutional Power of Bankruptcy Courts

The Supreme Court recently granted certiorari in PEM Entities LLC v. Levin, in which it will decide whether federal or a state law should apply when a debt claim held by a debtor’s insider is sought to be recharacterized
Continue Reading Could Supreme Court Case on Debt Recharacterization Provide a Pathway Out of the Stern v. Marshall Maze?

In Millennium Lab Holdings, Delaware District Court Judge Leonard Stark, on an appeal from a bankruptcy court order confirming a plan of reorganization, recently upheld a challenge to the bankruptcy court’s constitutional authority to release claims against non-debtor third
Continue Reading Millennium Lab Holdings – Ruling on Third Party Releases Highlights Continuing Constitutional Questions Regarding Power of Bankruptcy Courts