2015 Northeast Bankruptcy Conference, 2014

The U.S. Supreme Court will decide three bankruptcy cases this term: (1) Executive Benefits Insurance Agency v. Arkison, which addresses the constitutionality of the district court referral system for bankruptcy cases and consent to jurisdiction where separation of powers is at issue; (2) Clark v. Rameker, which involves the availability of exemptions for inherited IRAs; and (3) Law v. Siegel, which deals with a bankruptcy court’s authority under § 105 to surcharge exemptions.

Section 363 sales are frequently invoked in an effort to render the debt side of a balance sheet irrelevant. Buyers and sellers generally spend much of their time negotiating pre-sale issues, such as bidding procedures, “break-up fees” and other bidding protections, perhaps relying on the “free and clear” language of § 363(f) to absolve the buyer of any liabilities associated with the assets. Buyers at § 363 sales typically assume that they take the assets free and clear of all liens and claims.

The chapter 11 plan has been confirmed, and consummation is on the horizon. But unforeseen circumstances have put the plan in peril or, worse yet, have caused the plan to fail. This panel will discuss the issues that arise when a plan fails post-confirmation. What alternatives exist? What provisions should be included in a plan to anticipate and guard against failure? Where can the parties go for court assistance?

The opening line to any discussion about the current trends in chapter 11 cases is often, “Everything is a 363 sale.” Well, not everything: The other way that companies are seeking to minimize the risks of chapter 11 is through the prepack.

Contested evidentiary hearings in chapter 11 confirmation battles have one near-constant attribute: They are expert witness-intensive undertakings. Whether relating to the value of a secured lender’s collateral, the appropriate discount rate to be applied in valuing a payment stream provided under a plan, compliance with the best-interests-of-creditors test, feasibility or any number of other potentially contested issues, presenting expert testimony is at least worth considering, if not required.