Two recent decisions from Delaware illustrate somewhat divergent views from the bankruptcy bench on the proper procedures for obtaining non-debtor releases in confirmed plans of reorganization. In both In re Emerge Energy Services LP, et al.1 and In re Cloud Peak Energy Inc., et al.2 the debtors’ initial, and then certain subsequent, efforts at plan confirmation were stymied by proposed opt-out procedures. Ultimately, both debtors were able to confirm their plans after adjusting the applicable release provisions, as described below. Collectively, these decisions demonstrate how closely many courts will scrutinize non-debtor releases and the importance of designing procedures for obtaining consent to such releases that demonstrate that they are procedurally fair.

Continue Reading Recent Delaware Decisions Show Divergent Views on Third-Party Release Procedures

Bloomberg reports that Quorum Health Corp., which operates hospitals in 14 states, filed for chapter 11 bankruptcy on April 7, 2020, as it grapples with the financial strain of COVID-19 coronavirus. The debtors have reportedly received commitments for $100 million in DIP financing and $200 million in equity from existing noteholders. [Bloomberg; Apr. 7, 2020]

According to New York’s comptroller, Scott Stringer, the city could lose approximately $4.8 to $6 billion in tax revenue as a result of the COVID-19 coronavirus, reports The Atlantic. [The Atlantic; Apr. 1, 2020]

Fortune reports that many U.S. financial institutions are seeking to discourage borrowers from drawing on existing  credit lines, but expect that such draws are likely to come. Over the past two weeks, U.S. financial institutions have sold approximately $50 billion of bonds to meet the needs of borrowers. [Fortune; Mar. 30, 2020]

The FDIC issued a “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus,” which addresses how to account for loan modifications made in connection with COVID-19 coronavirus. [FDIC; Mar. 22, 2020]

Law360 reports that Bar Louie has cancelled a previously scheduled chapter 11 auction and will, instead, be sold to its secured lenders that served as the stalking horse bidder. Bar Louie reportedly received no other qualified bids. [Law360; Mar. 27, 2020]

The recently enacted CARES Act seeks to aid consumer and small business debtors, reports The Wall Street Journal. For consumer debtors, the CARES Act protects forthcoming federal stimulus checks from being used to pay pre-petition debts. For commercial debtors, the CARES Act expands access to relief under the recently enacted Small Business Reorganization Act (“SBRA”) by temporarily increasing the law’s debt threshold. The SBRA’s $2,725,625.00 debt threshold will be increased to $7,500,000.00 for the next 12 months. [WSJ; Mar. 26, 2020]

Writing for Bloomberg Opinion, Matt Levine writes on the current state of repos and margin calls in the mortgage market as COVID-19 coronavirus continues to inject uncertainty into the market. [Bloomberg; Mar. 26, 2020]

NBC reports on recent projections from S&P that the default rate on high yield bonds over the next 12 months could reach approximately 10-13%. Default rates on high yield bonds reached 3.1% at the end of 2019. [NBC; Mar. 20, 2020]


Goldman Sachs published a research report suggesting that recently implemented social distancing measures will result in declines in services consumption, manufacturing activity, and building investment that will lower the level of GDP in April by nearly 10%. [Goldman Sachs; Mar. 20, 2020]

The Eight Circuit Court of Appeals Bankruptcy Appellate Panel recently released its decision in Bank of Missouri v. Family Pharmacy, Inc. et al., which determined that an oversecured creditor “has an unqualified right to post-petition interest under 506(b), and that interest should be computed at the rate — default as well as non-default — provided in the parties’ agreement, as long as those rates are allowed under state law.” [8th Cir.; Mar. 19, 2020]

The Wall Street Journal reports that the International Air Transport Association is estimating that a $200 billion bailout will be required to avoid mass bankruptcies by global airlines. [WSJ; Mar. 18, 2020]

The National Law review recently published a primer on the intersection of COVID-19 coronavirus and its potential effects on global corporate debt that is at risk of default. Per the article, the IMF determined in 2019 that approximately $19 trillion of the approximately $51 trillion in global corporate debt was a risk of default during the next global economic downturn. [Nat’l L. Rev.; Mar. 17, 2020]



Recent oil price drops may accelerate the pace of oil and gas bankruptcies in the United States, reports Law360. In light of such drops, the industry appears to be facing a situation similar to one it faced in 2016 and 2017, when many drilling companies sought bankruptcy protection. [Law 360; Mar. 11, 2020]

Per Crain’s, Art Van Furniture, a Warren, Michigan based furniture and mattress retailer, has filed for Chapter 11 bankruptcy relief. The company continued to see revenue losses despite recent amendments to its primary loan agreements and efforts to improve its e-commerce platform. [Crain’s; Mar. 11, 2020]

Yahoo reports that Foresight Energy L.P. and certain of its affiliates have filed for chapter 11 bankruptcy relief in the Eastern District of Missouri. [Yahoo; Mar. 10, 2020]

Bloomberg reports that the recent downturn in the market, caused in large part by COVID-19 coronavirus, may have an out-sized impact on middle-market companies. Breaks in global supply chains resulting in a lack of access to necessary raw materials are noted as critical concerns for such companies. [Bloomberg; Mar. 9, 2020]

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

Law360 reports that Purdue Pharma LP is seeking a 180-day extension of a preliminary injunction put in place earlier in the bankruptcy process that halted litigation relating to Purdue’s role in the national opioid crisis not only against the debtors themselves but also against the debtors’ current and former owners, officers, directors, employees, and associated entities. In their motion seeking to extend the preliminary injunction, the debtors argued that such an injunction is necessary to continue working towards a collaborative solution to addressing the thousands of claims against the debtors and their owners that precipitated the bankruptcy filing. [Law360; Mar. 5, 2020]

The Financial Times is reporting that coronavirus (also known as COVID-19) is raising the risk of reducing global credit availability in a global market with already low (and in some cases negative) interest rates. [FT; Mar. 4, 2020]

Pioneer Energy Services Corp. filed for chapter 11 relief, reports the Wall Street Journal. Pioneer’s prepackaged chapter 11 plan seeks to swap $300 million in senior secured note debt for most of the equity in the reorganized company. If the plan is confirmed, Credit Suisse, Ascribe Capital and Loomis, Sayles & Co. would take control of the reorganized company. [WSJ;  Mar. 4, 2020]

Judge Kevin Gross of the United States Bankruptcy Court for the District of Delaware recently ruled on apportionment of business interruption insurance proceeds and property damage insurance proceeds in In re PES Holdings, LLC, et al., finding that a bank that served as an oil and gas intermediary to the debtors’ refineries had first priority on $1.25 billion in business interruption insurance proceeds. Judge Gross further found that property damage insurance proceeds were to be split between one of the debtors’ secured lenders and a bank that served as a crude oil supply and finished-product shipping and financing intermediary to the debtors’ refinery. The debtors’ official committee of unsecured creditors sought, but was not awarded, a share of insurance proceeds. Law360 reports that this opinion will be Judge Gross’s last opinion before retirement. [Bankr. Ct. D. Del.; Feb. 28, 2020 | Law360; Feb. 28]

Law360 reports that Bar Louie secured approval for its sale procedures on Thursday, February 27, 2020. Judge Mary Walrath of the United States Bankruptcy Court for the District of Delaware approved the sale procedures after cutting the stalking horse bidder’s breakup fee by $1.4 million and eliminating a 1% reimbursement fee intended to be paid to the stalking horse. The bidding deadline for the company’s assets is March 26, 2020, with a sale hearing to follow on April 7, 2020. [Law360; Feb. 27, 2020]

After being placed into an involuntary chapter 11 bankruptcy in January of 2020, Tough Mudder LLC will be sold to Spartan Race Inc. for $700,000.00, reports Bloomberg News. Spartan will reportedly assume as much as $10 million of Tough Mudder’s outstanding liabilities. [Bloomberg; Feb. 25, 2020]

Restaurants Unlimited Inc.’s chapter 11 bankruptcy plan was approved on February 25, 2020 after Judge John Dorsey of United States Bankruptcy Court for the District of Delaware reined in the plan’s exculpation provisions to cover only estate fiduciaries for conduct that occurred during the course of the bankruptcy proceeding, per Law360. [Law360; Feb. 25, 2020]

Fast casual restaurant chain Cosi, Inc. has filed for chapter 11 bankruptcy for the second time since 2016, reports the Wall Street Journal. Cosi will look to focus on increasing its catering business, which has outperformed its in-store sales since 2010. [WSJ; Feb. 24, 2020]

Forty-two state Attorneys General have signed on to a National Association of Attorneys General letter in support of H.R. 4421, which seeks to limit forum shopping in chapter 11 cases by limiting the jurisdiction in which a debtor may file to the jurisdiction where its principal assets are located or the jurisdiction where its principal assets are located. [NAAG; Feb. 20, 2020]

In U.S. v. Chesteen (In re Chesteen) the Fifth Circuit Court of Appeals recently held that a debt owed to the IRS under the Affordable Care Act’s shared responsibility payment provisions is not an excise tax entitled to payment priority under section 507(a)(8)(E)(I) of the Bankruptcy Code. [5th Cir.; Feb. 20, 2020]

The Second Circuit Court of Appeals recently issued a summary order in Marsh USA Inc. v. The Bogdan Law Firm (In re Johns-Manville Corp.) finding that the estate of an insulation worker could not seek compensation from an insurance company in Mississippi state court and was, instead, limited to seeking compensation from a trust established in 1986 in connection with Johns-Manville’s bankruptcy. The court determined that the future claims representative appointed in connection with the Johns-Manville bankruptcy adequately represented the worker’s interests, which resulted in a court order restricting the worker and other claimants from seeking compensation outside of the channeling trust structure. [2nd Cir.; Feb. 19, 2020]

Law360 reports that Boy Scouts of America is seeking a quick emergence from Chapter 11 that will allow it to preserve the organization’s mission while dealing with sexual abuse claimants fairly (likely through a channeling trust). Counsel to the Boy Scouts is currently seeking to channel the sexual abuse claims against Boy Scouts of America to the United States District Court for the District of Delaware. [Law360; Feb. 19, 2020]


The Wall Street Journal reports on a bankruptcy court’s decision to grant a student borrower’s request to erase his student debt [WSJ; Jan.8, 2020]

Bloomberg article discusses new loopholes in CLO documents, giving managers more control, and sparking an investor backlash [Bloomberg; Jan. 23, 2020]

PG&E reaches bankruptcy deal but, as the New York Times reports, Governor Newsom isn’t so sure [NYT; Jan. 23, 2020]