News & Publications

On Sept. 10, 2024, the US Court of Appeals for the Third Circuit struck down a Delaware bankruptcy court ruling that a solvent debtor could pay its noteholders' interest at the lower federal judgment rate (a codified and typically lower interest rate), as opposed to a higher contract rate, and that the debtor need not pay contractual "make-whole" payments. The debtor, The Hertz Corporation, sought to uphold the bankruptcy court's ruling because the contractual default [...]

In late June the Supreme Court handed down Harrington v. Purdue Pharma L.P. a 5-4 decision in which the court made clear the decades-long practice of shielding non-debtors from future claims in exchange for their financial contribution to creditors' recovery in a Chapter 11 bankruptcy plan was no more. The Sackler family—who long owned and controlled the now infamous maker of OxyContin—had negotiated a $6 billion contribution to Purdue's bankruptcy as a "settlement" of all claims past [...]

The U.S. Trustee has recently taken the position that GUC Trusts (creditor trusts formed under bankruptcy plans) should be required to pay fees on account of their own disbursements to creditors. The outcomes in three recent bankruptcy cases highlight different approaches to addressing the U.S. Trustee's argument: closing bankruptcy cases early, deferring the issue to a later date, or focusing on the distinction between contingent and non-contingent assets. What You Need to Know There is [...]