| |
| |
| vol 18, num 1 | August 2020 |
| |
|
|
| |
|
|
|
|
|
| |
| With Blixseth, the Ninth Circuit Relaxes Its Grip on Third-Party Releases |
| For the last 25 years, third-party releases in chapter 11 plans were thought to be categorically prohibited in the Ninth Circuit. With its recent decision in Blixseth v. Credit Suisse, however, the Ninth Circuit Court of Appeals walked that prohibition back by affirming confirmation of a plan that released third parties from liability for actions taken during the bankruptcy case. Blixseth may affect where large financially distressed companies located within the Ninth Circuit decide to file for bankruptcy.
The goal for the debtor in most every chapter 11 case is to confirm a plan. The plan sets forth the treatment creditors receive on account of their pre-petition claims. Following confirmation of the plan, the Bankruptcy Code expressly provides that a chapter 11 debtor receive a discharge of pre-confirmation debt. This debt discharge is a key benefit of the chapter 11 process to the debtor.
However, there are statutory limitations to the debtor’s ability to discharge pre-confirmation debt. Section 524(e) of the Bankruptcy Code limits the scope of the discharge by providing that the “discharge of a debt of the debtor does not affect the liability of any other entity on, or the property of any other entity for, such debt.” Nevertheless, for reasons that depend on the facts of the case, debtors sometimes seek to extend the discharge to third parties, such as directors, officers, or guarantors, in the form of releases contained in the plan for actions they took prior to and during the bankruptcy case. |
| |
|
|
|
|
| |
|
| |
| More Transparency of Post-Petition Debt |
| One thing that Toys “R” Us, Sears and Forever 21 have in common is that all three cases are administratively insolvent. Vendors who extended credit to the debtor after the petition date in reliance on the debtor’s assurances that it had adequate “DIP” financing to justify new credit terms got stuck a second time when there were inadequate funds to pay the administrative claims of vendors that had supplied the debtor post-petition. I emphasize “of vendors” because, fortunately, apparently there was enough money to treat post-petition professional fees much more generously. |
| |
|
|
|
|
| |
|
| |
| Announcing ABI’s COVID-19 Resources Page! |
 |
| Check out our brand-new COVID-19 Resources Page! Developed for both bankruptcy professionals and the public alike, the page houses links to essential information and analysis regarding the financial distress being inflicted by the COVID-19 pandemic. The site features exclusive ABI content on the crisis, recommended member analysis, industry sector news, charts and more. |
| |
|
|
|
|
| |
|
| |
| Unsecured Trade Creditors Committee Leadership for 2020 |
| The Unsecured Trade Creditors Committee is proud to announce our new leaders for 2020!
You can also visit the committee's homepage for more newsletter articles, relevant recordings and other committee information.
The committee is always eager to welcome new volunteers. Please contact any member of our leadership team to find out how you can get involved.
|
|
|
 |
| |
Shanti M. Katona
Newsletter Editor
Polsinelli
Wilmington, Del. |
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
