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With more than $1.7 trillion in student loan debt outstanding in the United States, student loan borrowers sometimes try to turn to the bankruptcy courts for relief, often without success due to the fact that most student loans are presumed to be nondischargeable.[1]  In its July 15, 2021 decision in In re Homaidan,[2] the Court of Appeals for the Second Circuit considered one aspect of this issue—whether certain private student loans made directly to a borrower are automatically presumed to be nondischargeable as “educational benefits” under Section 523(a)(8) of the Bankruptcy Code.  The Second Circuit found they are not, ruling against the appealing student loan lender.
Continue Reading Opinion of Interest – In re Homaidan: Not all Private Student Loans are Presumptively Nondischarbeable in Bankruptcy

CNBC analyzes the Labor Department’s latest jobs report, which showed 850,000 jobs gained in the U.S. in June, much higher than economists expected.  The hospitality sector, particularly bars and restaurants, accounted for the largest share of employment gains, with education and professional services also seeing increased employment.  The article notes that hiring has accelerated as

Just after 5:00 p.m. Central Time on February 23, 2021, Belk, Inc. and its affiliates filed chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Texas, along with a proposed “prepackaged” plan of reorganization.   Before midnight, the US Trustee objected to Belk’s plan, and, by 8:00 a.m. the next day, the parties were in court to decide plan confirmation.  Two hours later, Bankruptcy Judge Marvin Isgur confirmed the plan, and it became effective that afternoon, just 20 hours after the Chapter 11 cases were filed.  Typically, chapter 11 debtors take many months, if not longer, to confirm a plan, and even prepackaged bankruptcy cases like Belk’s often take several weeks from filing to confirmation.   As we discuss in this post, Belk’s swift bankruptcy case is part of a growing trend of bankruptcy courts confirming chapter 11 plans shortly after case filing where there is adequate notice and creditor buy-in prior to the filing.

Continue Reading Belk Chapter 11 Plan Confirmed and Effective Within 24 Hours of Bankruptcy Filing

Mayer Brown partners Sean Scott and Aaron Gavant and associate Josh Gross discussed a recent decision arising out of the Samson Resources Chapter 11 case wherein the U.S. Bankruptcy Court for the District of Delaware concluded that securities transactions with a debtor in which the debtor itself is the “financial participant” may be protected from

In a recent decision in In re Nuverra Environmental Solutions, Inc., No. 18-3084, 2021 WL 50160 (3d Cir. Jan 6, 2021), a divided Third Circuit panel held that an appeal of a Chapter 11 plan confirmation order was equitably moot and that the dissenting unsecured creditor who filed the appeal, David Hargreaves, was not entitled to individualized relief.  Under the confirmed Chapter 11 plan in Nuverra, secured creditors did not receive payment in full and creditors that were holders of prepetition unsecured notes, including Hargreaves, received cash and securities equal to only six percent of the face value of their note claims, while trade creditors were entitled to be paid in full.  The plan proponents described the full payment to these unsecured trade creditors as a “gift” from the secured creditors, who were undersecured based on the debtors’ enterprise value under the plan.

Continue Reading Opinion of Interest – In re Nuverra Environmental Solutions, Inc.

Bloomberg confirms that 2020 was the biggest year for large commercial bankruptcies since the Great Recession in 2009.  Led by the energy, retail, and consumer services sectors, 224 companies with liabilities exceeding $50 million filed Chapter 7 and 11 cases, far exceeding the number of large filings each year in the preceding decade. Bloomberg also

As reported in Yahoo Finance, the first trading day of 2021 was off to a rocky start in the U.S.  Despite progress on COVID vaccine distribution, markets reacted to the discovery of a highly transmissible strain of COVID in the US, which comes with a greater risk of lockdowns, along with uncertainty surrounding the

In its February 25, 2020, decision in Rodriguez v. FDIC, the US Supreme Court unanimously rejected the “Bob Richards rule” (so named for a 1973 Ninth Circuit decision) and held that federal common law does not govern the allocation of tax refunds within a consolidated corporate group in the absence of a tax allocation agreement to the contrary.1 The decision is likely to have significant implications with respect to inter-corporate disputes over the proper allocation of tax refunds.2


Continue Reading US Supreme Court Discards Bob Richards Rule, Holds “Federal Common Law” Does Not Govern Inter-Company Distribution of Tax Refunds

In less than 24 hours beginning on May 1, 2019, Sungard Availability Services Capital, Inc., and its affiliates (collectively, “Sungard”) commenced and completed Chapter 11 proceedings in what has been described as the fastest Chapter 11 case ever. Sungard filed its Chapter 11 cases just before 9pm on May 1 in the Bankruptcy Court for the Southern District of New York, White Plains Division, and, before 6pm the next day, Judge Robert Drain entered an order confirming Sungard’s prepackaged Chapter 11 plan.[1] The Sungard debtors were able to obtain this rapid result through extensive pre-filing planning and negotiations, and likely also benefited from assignment of their cases to Judge Drain, who had prior experience in addressing similar, expedited pre-packaged cases.[2]
Continue Reading Short-Order Reorganization: Sungard’s 24-hour Bankruptcy Case