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On Feb 27, 2018, in Merit Management Group, LP v. FTI Consulting, Inc., 138 S. Ct. 883 (2018), the Supreme Court of the United States issued a decision holding that: 1) the only relevant transfer for purposes of analyzing whether the Bankruptcy Code section 546(e) “safe harbor” applies is the “overarching transfer” that the trustee is seeking to avoid (as opposed to the component transfers between mere intermediaries); and 2) under the facts presented, the relevant transfer between the debtor and transferee was not covered by the safe harbor because it was not “made by or to (or for the benefit of)” a “financial institution” or other covered entity. Merit Management Group, LP v. FTI Consulting, Inc., 138 S. Ct. 883 (2018), abrogating In re Quebecor World (USA) Inc., 719 F.3d 94 (2d Cir. 2013), In re QSI Holdings, Inc., 571 F.3d 545 (6th Cir. 2009), Contemporary Indus. Corp. v. Frost, 564 F.3d 981 (8th Cir. 2009), In re Resorts Int’l Inc., 181 F.3d 505 (3d Cir. 1999), In re Kaiser Steel Corp., 952 F.2d 1230 (10th Cir. 1991).
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Delaware District Court Could Guide Supreme Court Purdue Pharma Decision
By Michael L. Cook
A bankruptcy court properly held that derivative claims based on “piercing the corporate veil theory of liability [were] released under” a confirmed reorganization plan, but that direct “claims for negligent undertaking” were not released and “could be asserted” in state court against the debtors’ equity sponsors.
Court Caps Landlord's Bankruptcy Claim Against Lease Guarantor
By Andrew C. Kassner and Joseph N. Argentina Jr.
A big issue in real estate and retail bankruptcies, among others, involves the disposition of commercial real estate leases, given the potential magnitude of landlord damage claims under state law resulting from a tenant’s default under a long-term lease.
Delaware Bankruptcy Court Rejects Equity Holder's Challenge to Revoke Confirmation Order
By Lawrence J. Kotler
The equity owner asserted that the confirmation order previously entered by the court should be revoked based on the equity owner’s claim that value was lost due to improper sale and marketing efforts by the debtors and its professionals both pre- and post-bankruptcy and, as such, they should have been “in the money” and entitled to a distribution under the confirmed plan.
By George Williams
One of the major catalysts of the “Crypto Winter” that began in 2022 was the collapse of Terraform Labs’s native token LUNA in May 2022. Now two years and a dozen crypto-related bankruptcies later, Terraform Labs has filed for Chapter 11 protection.