Business Restructuring Review Vol. 21 No. 4 July'August 2022

• Published date: 01 August 2022
• Subject Matter: Finance and Banking, Insolvency/Bankruptcy/Re-structuring, Debt Capital Markets, Financial Services, Financial Restructuring, Insolvency/Bankruptcy
• Law Firm: Jones Day
• Author: Ms Heather Lennox, Mark Douglas, Dan Moss, Daniel Merrett, T. Daniel Reynolds, Dan Prieto and Oliver Zeltner

In This Issue:

Lawyer Spotlight: Bruce Bennett

Bruce Bennett, a partner in the Los Angeles and New York offices, has been at the helm of many of the largest corporate reorganizations in the United States. He has acted as counsel for major creditors in the chapter 11 cases for iHeart Communications, Caesars Entertainment Operating Corp., Energy Future Holdings, and General Motors; and in out-of-court negotiations and in insolvency cases for instrumentalities of Puerto Rico. He was also co-lead counsel for the City of Detroit in its historic chapter 9 debt adjustment cases.

In 2021, Bruce was honored with the "Mega Company Turnaround/Transaction of the Year" award by the Turnaround Management Association. He was selected for his role as a principal member of the team of legal counsel and financial advisors who represented holders of approximately 40% of the equity interests of PG&E Corp., the owner of Pacific Gas and Electric Company ("PG&E") in connection with their chapter 11 reorganization cases. PG&E is the largest utility in California and one of the largest public utilities in the United States, and the bankruptcy cases were among the largest in U.S. history.

Bruce recently stepped down as Global Practice Leader of the Firm's Business Restructuring & Reorganization Practice, a role in which he had served since 2016, now held by Heather Lennox. He continues to advise clients as a partner in the practice.

U.S. Supreme Court Bankruptcy Roundup

The U.S. Supreme Court held unconstitutional certain aspects of a 2017 enactment that drastically increased the quarterly fees charged by the U.S. Trustee in large chapter 11 cases, but left open the question of the remedy, an issue it remanded to courts below in two separate cases. For the term beginning in October 2022, the Court agreed to review a decision to resolve a circuit split regarding whether a debt based on fraud committed by, or a false representation made by, the debtor's partner or agent is nondischargeable in the debtor's bankruptcy case. It also agreed to review a case addressing the doctrine of statutory mootness of an appeal of an unstayed order authorizing the sale of a lease in bankruptcy. It declined petitions to review rulings addressing the doctrine of equitable mootness and the standard for imposing contempt sanctions for repeated violations of bankruptcy court orders. [read more ...]

Buyer's Bad Faith in Failing to Inform Court of Adverse Interest in Property Precludes Statutory Mootness of Bankruptcy Sale

In Archer-Daniels-Midland Co. v. Country Visions Cooperative, 29 F.4th 956 (7th Cir. 2022), the U.S. Court of Appeals for the Seventh Circuit affirmed lower court rulings denying the motion of a buyer of property from a chapter 11 estate to bar an entity holding a right of first refusal on the property from continuing state court litigation seeking to enforce its right. According to the Seventh Circuit, because the buyer had actual and constructive knowledge of a right of first refusal held by a party who had not received notice of the bankruptcy, yet never informed the bankruptcy court, the buyer had not acted in good faith and was not entitled to the protections of section 363(m). [read more ...]

Liquidating Chapter 11 Debtor Excused from Providing...