The Bankruptcy Code generally restricts the trustee’s employment of professionals to those “that do not hold or represent an interest adverse to the estate, and that are disinterested.”[1] Broadly speaking, “disinterested” persons are those who do not have a pre-petition interest in or relationship with the debtor.
The Pension Benefit Guaranty Corporation (PBGC) can be the largest unsecured creditor in chapter 11 cases and is usually a very influential member of creditors’ committees, which can lead to feuds with other creditors.
Debtors, whether a corporation or an individual, often need to divest of real estate holdings while under bankruptcy protection. Section 363 of the Bankruptcy Code provides an avenue (and often the only avenue) by which a trustee or debtor[1] in possession (DIP) may sell property of the estate.[2] Specifically, § 363(b)(1) provides that a trustee or DIP may sell property of the estate “other than in the ordinary course of business” after “notice and a hearing.”[3]
Football season is upon us, and in locker rooms across the country, coaches will be telling their teams, “Winning isn’t everything; it’s the only thing.” Unfortunately for plaintiffs suing debtors in bankruptcy adversary proceedings, winning isn’t the only thing that matters. In fact, winning a judgment can be less than half of the battle.
The Great Recession renewed widespread use of receiverships, one of the oldest pre-judgment remedies available to creditors. What was once old has become new again, portrayed by the fact that one of the leading treatises on receiverships remains Ralph Ewing Clark’s Treatise on the Law and Practice of Receivers 3d, originally published in 1918 and last updated with a 1968-69 supplement.
When many bankruptcy practitioners think of § 546 of the Bankruptcy Code, it is in connection with the statute of limitations for avoidance actions. While these provisions may be widely known, § 546 contains several other provisions that can have a substantial impact on a party’s substantive rights in a bankruptcy case.
[1]On June 17, 2014, the U.S. Bankruptcy Court for the Northern District of Illinois addressed the defense to fraudulent transfer liability under § 548(c) of the Bankruptcy Code.[2] Section 548(c) provides a defense for otherwise fraudulent transfers if the transferee accepts the transfer in good faith, and provides value in exchange for such transfer.[3] Thus, there are two prongs to this defense: good faith and value.[4]
With an increasing number of bankruptcy cases centering on massive financial frauds, bankruptcy courts in recent years have drastically extended the definition and scope of “property of the estate.” Not surprisingly, this broader definition has also led to an increased application of the automatic stay, sometimes extending the stay to third-party actions that were not even brought against debtors.[1]
General Motors (GM) is currently facing two main types of lawsuits linked to its recall of cars with defective ignition switches. For those injured or killed as a result of these switches, GM has set up a special fund to compensate victims and their families.[1] Yet, the very contentious and much more expensive issue concerns car owners suing GM for economic losses related to the defects,[2] and these claims could easily reach into the billions of dollars.[3]
