On a Mission: Supreme Court Clarifies Effect of Rejection of Executory Contract

Mission Prod. Hldgs., Inc. v. Tempnology, LLC, No. 17-1657 (2019).

In Mission Prod. Hldgs., Inc. v. Tempnology, LLC, the United States Supreme Court resolved a long-standing Circuit Court split in holding that a debtor’s rejection of an executory contract does not eliminate a contract counterparty’s right to use certain debtor trademarks provided thereunder.  Rather, according to the Court, following the debtor’s rejection of such contract, the counterparty retains the rights it received pursuant to the terms of the underlying agreement and applicable nonbankruptcy law.

Generally, Mission Product Holdings, Inc. (“Mission”) entered into a contract with Tempnology,… Read More

Two Clear-Cut Decisions of the Supreme Court – Narrowing Both Section 546(e)’s Securities Safe Harbor in Merit and the Standard of Review for Non-Statutory Insider Determinations in U.S. Bank

Merit Mgmt. Group, LP v. FTI Consulting, Inc., 583 U.S. __ (2018)

U.S. Bank Nat’l Ass’n v. Vill. at Lakeridge, LLC, 583 U.S. __ (2018)

On February 27, 2018, the United States Supreme Court issued its unanimous holding in Merit Management Group, LP v. FTI Consulting, Inc.  The Opinion, delivered by Justice Sotomayor, addressed a Congressional limitation placed on a trustee’s power to avoid certain transfers, such as preferential transfers under 11 U.S.C. § 547 or constructively fraudulent transfers under 11 U.S.C. § 548(a)(1)(B).  More specifically, section 546(e) of the… Read More

The Supreme Court’s Answer is Simply “No”—Structured Dismissals Cannot Deviate From the Code’s Priority Rules Without Consent of Affected Creditors

Czyzewski v. Jevic Holding Corp., 580 U.S. ___ (2017)

In Official Comm. of Unsecured Creditors v. CIT Group/Business Credit, Inc. (In re Jevic Holding Corp.), 787 F.3d 173 (3d Cir. May 21, 2015), the Third Circuit Court of Appeals examined structured dismissals and whether the distributions provided for therein can deviate from the Bankruptcy Code’s priority distribution scheme.  It held that they could but only in the “rare case.”  Almost two years later, the Supreme Court has weighed in on the issue, disagreeing with the Third Circuit and holding that a bankruptcy court cannot approve a structured dismissal that… Read More

Supreme Court’s Restrictive Reading Of Bankruptcy Code Section 330 Leaves Bankruptcy Professionals High And Dry

Baker Botts L.L.P. v. ASARCO LLC, 576 U.S. —- (2015)

The Supreme Court made a significant ruling that will encourage leveraged fee attacks on estate professionals in bankruptcy cases.  In an Opinion delivered by Justice Thomas, and joined by five other Justices, the High Court ruled that Bankruptcy Code section 330(a)(1) does not permit a bankruptcy court to award estate professionals fees for work performed in defending a fee application.

In this case, two law firms were retained under Bankruptcy Code section 327(a) to provide legal representation for the debtor, and more specifically, to prosecute fraudulent transfer claims.  The law… Read More

Stern Dissent Takes Majority in Wellness, Holds Parties Can Consent To Bankruptcy Court Final Adjudication of Stern Claims

Wellness Int’l Network, Ltd. v. Sharif, 575 U.S. —- (2015)

On May 26, 2015, the Supreme Court closed the loop on an issue left open by the High Court’s previous decisions in Stern v. Marshall, 564 U.S. ____ (2011) (holding that Article III prevents bankruptcy courts from entering final judgments on Stern claims (i.e., proceedings that are defined as core under 28 U.S.C. § 157(b) but that may not, as a constitutional matter, be adjudicated as such)) and Executive Benefits Insurance Agency v. Arkison, 573 U.S. ___ (2014) (permitting bankruptcy courts to submit proposed findings of fact and conclusions of… Read More

“Ain’t Over Till It’s Over”: SCOTUS Holds Denial of Plan Confirmation Absent Dismissal of the Case Not a Final, Appealable Order

Bullard v. Blue Hills Bank, 575 U.S. ___ (2015)

On May 4, 2015, the Supreme Court of the United States delivered a unanimous Opinion, penned by Chief Justice Roberts, holding that an order denying confirmation but not dismissing a bankruptcy case is not a “final” order that the debtor can immediately appeal.  In so holding, the Supreme Court held that the relevant “proceeding” is the entire process of considering plans for confirmation and if the debtor has the opportunity to propose another plan, the order denying confirmation is not final and not immediately appealable as a matter of… Read More

Stern Claims Should be Treated as Non-Core Under Section 157(c)(1); Ability to Consent Under Section 157(c)(2) Reserved For Another Day

Executive Benefits Insurance Agency v. Arkison, Chapter 7 Trustee of the Estate of Bellingham Insurance Agency, Inc., 573 U.S. ___ (2014)

Writing for a unanimous Court, Justice Thomas explained in Executive Benefits Insurance Agency v. Arkison, 573 U.S. ___ (2014) that a Stern claim (i.e. a proceeding that is defined as core under 28 U.S.C. § 157(b) but that may not, as a constitutional matter, be adjudicated as such) should proceed as non-core within the meaning of section 157(c)(1) so long as it otherwise satisfies the criteria of such section (i.e. “is not a core proceeding but . . . is… Read More

Bankruptcy Court Cannot Use Section 105 to Contravene Other Bankruptcy Code Provisions Says The Supreme Court

Law v. Siegel, 2014 WL 813702, 571 U.S. ___ (2014)

Justice Scalia delivered the Opinion issued by the Supreme Court in Law v. Siegel, which reversed the decision of the Ninth Circuit allowing a Chapter 7 trustee to surcharge a debtor’s homestead exemption pursuant to Section 105 of the Bankruptcy Code despite clear contrary authority of Section 522(k).  During his Chapter 7 proceeding, Steven Law (the “Debtor“) elected to claim a homestead exemption under California state law.  Pursuant to the express language of Section 522(k) of the Bankruptcy Code, the property subject to the exemption was to be… Read More