An important factor in many successful chapter 11 reorganizations is the debtor’s ability to procure necessary goods and services postpetition.  Without some additional incentive, however, third parties would be unlikely — if not altogether unwilling — to do business with a debtor postpetition.  To this end, the Bankruptcy Code includes a number of provisions aimed at encouraging third parties to conduct business with chapter 11 debtors.  One of the Bankruptcy Code’s most powerful incentives in this regard is section 507(a)(2)’s grant of priority for the “actual, necessary costs and expenses of preserving the estate” allowed as administrative expenses under section 503(b)(1).  These provisions ensure that vendors providing postpetition goods and services to the debtor will generally receive payment ahead of the debtor’s prepetition unsecured creditors.

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Eleventh Circuit Holds That Trustee Cannot Recover Tax Payments IRS Already Refunded

April 15, 2014

Recently, the Eleventh Circuit Court of Appeals issued a decision in Menotte v. United States (In re Custom Contracting LLC) that serves as a harsh reminder of the consequences of being on the wrong side of unfavorable facts (if not unfavorable law).  In Menotte, a chapter 7 trustee attempted to recover estimated income tax payments […]

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Approval of a SISP in a BIA proposal: Re Colossus Minerals Inc.

April 14, 2014

NORTH OF THE BORDER UPDATE This article has been contributed to the blog by Caitlin Fell and Jamie Rosenblatt. Caitlin Fell is an associate in the Insolvency & Restructuring group of Osler, Hoskin & Harcourt LLP and Jamie Rosenblatt is an articling student at Osler, Hoskin & Harcourt LLP. In Re Colossus Minerals Inc. (2014), […]

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Peanut Butter Maker Takes More Bread in 363 Sale, Leaves Winning Bidder in a Jam

April 11, 2014

As we have noted in number of previous posts, auctions under section 363(b) of the Bankruptcy Code end with the bankruptcy judge’s gavel, not the auctioneer’s.  To the dismay of many readers, the delay between concluding an auction and obtaining court approval allows for the possibility of post-auction bids, which may force the debtor/trustee to choose between accepting […]

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Would a U.S.-Based Bitcoin Exchange Be Eligible for Bankruptcy?

April 10, 2014

In our last Bitcoin Bankruptcy post, we discussed some of the questions that Mt. Gox’s chapter 15 filing raises.  Today, we begin to consider what a bankruptcy of a hypothetical U.S.-based bitcoin exchange might look like. 

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Free and Clear. Not So Fast. Bankruptcy Court Claws Back Ability to Sell Distressed Assets Free and Clear of Claims and Interests

April 9, 2014

Distressed asset purchasers should be aware of a recent decision, In re Marko, in which the bankruptcy court for the Western District of North Carolina called into question a trustee’s ability to sell estate assets free and clear of certain claims and interests, including claims and interests held against co-owners of the target assets.

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April 8, 2014

JUDGE MARKELL’S SPICKELMIER! Spickelmier fans, raise your impeccable bracket in the air for all the naysayers to see!  In the championship round, Spickelmier cruised into the number one spot with 60% of the votes.  Judge Markell’s witty reference to contemporary vernacular combined with his detailed account of counsel Mondejar’s “lowest moment in attorney representation the […]

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