HHR Bankruptcy Report

Category Archives: Third Circuit

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SCOTUS Grants Cert in Jevic

Posted in Chapter 11, SCOTUS, Third Circuit
Yesterday, the Supreme Court granted certiorari in Czyzewski v. Jevic Holding Corp (“Jevic”). As previously reported, Jevic addressed whether a bankruptcy court can approve a settlement agreement that provides for distributions that violate the absolute priority rules as part of the structured dismissal of a chapter 11 proceeding. The Third Circuit held that such structured… Continue Reading

Solicitor General Sides With Priority Creditors In Recent Amicus Brief

Posted in Chapter 11, SCOTUS, Section 1112, Third Circuit
Last summer, the HHR Bankruptcy Report analyzed the Third Circuit’s ruling in Official Committee of Unsecured Creditors v. CIT Group/Business Credit Inc. (In re Jevic Holding Corp.),[1] which approved, as part of the structured dismissal of a chapter 11 proceeding, a settlement agreement that allowed distributions that violated the absolute priority rule.  Following the Third… Continue Reading

Chapter 11 Debtors Exempt From Their Obligations Under An Expired Collective Bargaining Agreement

Posted in Chapter 11, Section 1113, Third Circuit
The Third Circuit’s decision in In re Trump Entertainment presents interesting opportunities for employers with expired collective bargaining agreements (“CBAs”) seeking to reorganize their companies under Chapter 11 of the Bankruptcy Code. [1] In In re Trump Entertainment, the Court held that a debtor may reject an expired CBA under Section 1113 of the Bankruptcy… Continue Reading

Third Circuit Allows Debtors’ Funds Purchased in Section 363 Sale to Bypass IRS and be Distributed to Administrative and Unsecured Creditors

Posted in Delaware, Section 363, Third Circuit
The Third Circuit has affirmed the Delaware Bankruptcy Court’s approval of a section 363 sale and related settlement agreement over IRS’s objection to provisions in the sale and settlement agreements that provide payments to unsecured creditors and other administrative creditors while leaving the IRS with no recovery. While the IRS argued that the sale and… Continue Reading

Structured Dismissal: The “Least Bad Alternative”

Posted in Chapter 11, Delaware, Third Circuit
The Third Circuit, in Official Committee of Unsecured Creditors v. CIT Group/Business Credit Inc. (In re Jevic Holding Corp.),[1] became the first court of appeals to approve the settlement and dismissal of a chapter 11 case. Structured dismissals, as understood by the Third Circuit, are “simply dismissals that are preceded by other orders of the… Continue Reading

Third Circuit Holds That Tax-Sharing Arrangement Creates a Debtor-Creditor Relationship

Posted in Tax, Third Circuit
Continuing a string of decisions interpreting tax-sharing arrangements, the Third Circuit recently held that under California law, a tax-sharing arrangement unambiguously created a debtor-creditor relationship and did not create an agency relationship or a trust relationship.  At issue in In re Downey Financial Corp.  2015 WL 307013  (C.A.3 (Del.),2015) was the division of over $370… Continue Reading

Practical Implications for Claims Traders in the Wake of KB Toys

Posted in Claims Trading, Third Circuit
Another wrinkle has emerged in the ever-evolving business of buying creditors’ claims against bankrupt entities.  In a recent decision the Court of Appeals for the Third Circuit held that a debtor can use Bankruptcy Code section 502(d) to disallow a claim from a creditor that had received preferential payments within 90 days of the bankruptcy,… Continue Reading