In a decision likely to have significant impact on certain types of bankruptcy filings going forward, this morning, the Third Circuit Court of Appeals ordered the dismissal of the Chapter 11 bankruptcy case filed by Johnson & Johnson affiliate LTL Management LLC.
After completing a multi-step divisional merger under Texas law (which led to LTL
Reporting from Reuters indicates that the German government plans to relax certain corporate insolvency rules in response to rising energy costs so that companies with financially sound business plans can avoid being required to file for protection under Germany’s insolvency laws. [Reuters; Sept. 9, 2022]
Bloomberg reports that the United States Court of Appeals for
Mayer Brown partners Aaron Gavant and Sean T. Scott and associate Danielle A. Corn recently published an article for Mayer Brown’s Perspectives & Events portal on the June 6, 2022, United States Supreme Court decision that resolved a circuit split and invalidated a 2017 statute that increased U.S. Trustee fees in 48 states—but not Alabama
Background
In a recent opinion issued in LCM XXII Ltd. v. Serta Simmons Bedding, LLC, No. 21-CV-3987, 2022 WL 953109 (S.D.N.Y. Mar. 29, 2022), US District Judge Katherine Failla of the Southern District of New York denied defendant Serta Simmons Bedding, LLC’s (“Serta”) motion to dismiss an action challenging its June 2020 non-pro rata
The Wall Street Journal reports on the surprise Thursday announcement from the U.S. Commerce Department that the U.S. gross domestic product unexpectedly shrank at a 1.4% annualized rate during the first quarter of 2022. The WSJ does not expect the GDP report to alter the Federal Reserve’s plan to raise interest rates this year, including
Recently, the Second Circuit became the first federal circuit court to rule that the federal government could deny a Paycheck Protection Program (“PPP”) loan to a debtor in bankruptcy solely because of an applicant’s bankruptcy status.[1] Prior to the Second Circuit’s decision in Springfield Hospital, Inc. v. Guzman, multiple lower federal courts were divided on the issue, although the majority of those courts reached the same conclusion as the Second Circuit.
Continue Reading Opinion of Interest – Springfield Hospital, Inc. v. Guzman: Second Circuit Upholds Federal Government’s Ability to Deny PPP Loans to Bankrupt Companies
In its January 14, 2022 decision in In re Wolfson, the United States Bankruptcy Court for the District of Delaware discharged Chapter 7 debtor Ryan K. Wolfson of nearly $100,000 in student loan debt.[1] Chief Judge Laurie Selber Silverstein found that Wolfson, an often un- or underemployed and chronically ill man, met the three-prong “Brunner test” and proved that repayment of his student loans would result in “undue hardship” under Section 523(a)(8) of the Bankruptcy Code. Declaring most interpretations of Brunner “unmoored from the original test and the plain language of ‘undue burden,’” Judge Silverstein held that, under the Brunner test, a debtor need only show an inability to maintain “a minimal standard of living” while repaying his or her student loans, not a total incapacity to ever repay them. In discharging the nearly six-figure debt, Judge Silverstein’s opinion found that allowing lifelong student loan debts to escape discharge absent an onerous standard of undue hardship conflicted with the promise of a “fresh start” that the Bankruptcy Code offers.
Continue Reading Opinion of Interest – In re Wolfson: A Potential Re-Evaluation of the “Undue Hardship” Test for Student Loan Borrowers
On January 20, 2022, Mayer Brown Restructuring lawyers Louis Chiappetta (Partner), Lucy Kweskin (Partner), and Samuel Rabuck (Associate) published an article in Law360 on a recent ruling from an adversary proceeding in the In re The Hertz Corp. bankruptcy case by the Delaware Bankruptcy Court on the enforceability of make-whole premiums in bankruptcy.
Given the
Reporting from the Wall Street Journal indicates that plaintiffs in price fixing lawsuits against generic drugmaker Teligent Inc. have sought court authority to continue that litigation despite Teligent’s October bankruptcy filing. The litigation, which commenced in 2016, alleges that Teligent artificially inflated the costs of certain generic drugs and is being pursued primarily by attorneys
Whether—and in what circumstances—a debtor should pay creditors a make-whole premium continues to be litigated in bankruptcy courts. Last week, as reported by Bloomberg, Judge Dorsey (Delaware) ruled that the debtor – Mallinckrodt Plc – did not need to pay a make whole premium to first lien lenders in order to reinstate such obligations