Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Sigh of Relief: Derivative Actions Safe for Now

By Scott D. Cousins and Luis Salazar
September 23, 2003

Much to the relief of many in the Third Circuit, its long-awaited en banc ruling in the Official Committee of Unsecured Creditors of Cybergenics Corp. v. Chinery, (en banc) No. 01-3805 (May 29, 2003) disagreed with the decision of one of its panels and upheld the right of parties other than a debtor or trustee to pursue avoidance actions under the Bankruptcy Code on a derivative basis. In doing so, the court supported the well-established practice allowing these derivative actions, and eschewed a slavish plain-language interpretation of Section 544(b) in favor of a broader, multi-section reading.

The Circuit's analysis of that Section employs a 'holistic' approach that is arguably quite at odds with the now decade-old Supreme Court trend of plain-language interpretation. In fact, the circuit court took great pains to demonstrate why the plain-language holding of Hartford Underwriter Ins. Co. v. Union Planters Bank ' a case appellees and the dissent argued was controlling ' was inapplicable. With the rumored retirement of Chief Justice Rehnquist, plain-language's champion, will Cybergenics signal the end of an era, or merely a narrow exception created by necessity? Or, if appealed to the Supreme Court, will it offer a final, conclusive opportunity to establish plain language as the sole interpretive mechanism for the Code?

Summary of the Case

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Removing Restrictive Covenants In New York Image

In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?

Fresh Filings Image

Notable recent court filings in entertainment law.