Law.com Subscribers SAVE 30%

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

Enjoining Actions Against Non-Debtors

By Todd L. Padnos and Matt Klinger
June 01, 2016

In bankruptcy cases, debtors often believe that enjoining a third party's action against a non-debtor can help preserve or rehabilitate the estate. But debtors rarely seek to enjoin actions against non-debtors, even though bankruptcy courts have the power to grant such injunctions under 11 U.S.C. ' 105(a). Many debtors likely avoid the tactic because enjoining such an action has generally required navigating a variation of the fact-driven, multi-part standard for preliminary injunctions or some other stringent test.

A recent decision by the U.S. Court of Appeals for the Seventh Circuit, however, appears to change the playing field in debtors' favor. In re Caesars Entm't Operating Co., 808 F.3d 1186 (7th Cir. 2015) established a two-part test that appears far more favorable to debtors than the previous standards applied to such injunctions. Caesars, written by one of the country's most well-respected and cited jurists, Judge Richard Posner, merely requires that a debtor show: 1) the injunction will enhance the debtor's prospects in the bankruptcy proceeding; and 2) the failure to enjoin the action would endanger the proceeding's success.

Standards for Injunctions Under 105(a) Against Non-Debtors

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.

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.

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.

Legal Possession: What Does It Mean? Image

Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.

The Anti-Assignment Override Provisions Image

UCC Sections 9406(d) and 9408(a) are one of the most powerful, yet least understood, sections of the Uniform Commercial Code. On their face, they appear to override anti-assignment provisions in agreements that would limit the grant of a security interest. But do these sections really work?