The US economy outperformed expectations in the first quarter of 2019. Advance estimates indicate that gross domestic product (GDP) grew by 3.2 per cent,2 above the predicted 2.2–2.5 per cent growth. The US Department of Commerce attributes much of this growth to increased state and local government spending and to companies stockpiling inventory of raw and finished goods. The strong first quarter notwithstanding, the US Federal Reserve has acknowledged that the economy is beginning to cool after two years of robust growth. GDP in 2018 grew by a strong 2.9 per cent (annualised), but Q4 2018's 2.2 per cent growth rate was markedly smaller than the previous two quarters' 4.3 per cent (Q3) and 3.4 per cent (Q2) growth.3 The US Federal Reserve forecasts GDP will grow by 2.1 per cent in 2019 (although this prediction pre-dates the unexpectedly strong first quarter), followed by around 1.9 per cent in 2020.4 The slowdown is attributed to the fading impact of the 2017 US tax code reforms, the looming trade war with China and economic weakness in Europe and China.5 The cooling economy may moderate the job market in 2019, after two years of remarkable growth. The unemployment rate reached new lows in 2018 and declined to 3.6 per cent in April 2019, the lowest rate since December 1969.6 By contrast, the stock market was rocked by volatility in 2018. The Dow Jones Industrial average swung 1,000 points in a single session five times in 2018; previously, it had only done so three times in its history.7 Stocks performance in 2018 was lower than at any time during the last 10 years,8 but the markets have rebounded in 2019 and have regained all the ground they lost since December 2018. The S&P 500 (a benchmark for the overall strength of the stock market) has surged more than 22 per cent since the new year, approaching its September 2018 all-time high of 2,940.9 Most commentators expect a good year for the stock market.

Although the federal funds rate has increased since last year (as of March 2019 the rate is 2.5 per cent, up from 1.75 per cent in March 2018), debt still remains cheap and readily available. The US Federal Reserve has indicated it does not intend to raise rates this year.10 Accordingly, companies in distress continue to roll over and refinance their debt rather than explore court-supervised restructurings. Bankruptcy filings have fallen steadily since 2010, and filings in 2018 were down further still.11 As of 31 December 2018, total Chapter 11 filings were down 1.5 per cent and business filings were down 3.9 per cent year-over-year.12 Public company (defined as companies with publicly traded stock or debt) filings fell from to 58 in 2018 from 71 in 2017.13 The combined asset value of the public company filers was only US$52 billion in 2018, compared to US$106.9 billion in 2017.14


Title 11 of the United States Code (Bankruptcy Code) governs bankruptcy cases filed in the United States.15 The Bankruptcy Code is premised on the theory that an honest debtor deserves a fresh financial start and thus relief from its unsecured debts. It endeavours to allow for this fresh start, while at the same time balancing the rights of the debtor's various constituents as fairly and equitably as possible. The Bankruptcy Code was enacted by Congress in 1978 and has been amended several times - the last substantial amendment was in 2005.

The filing of a petition by the debtor (for corporations, this is usually a petition for relief under either Chapter 7 or Chapter 11 of the Bankruptcy Code) commences the bankruptcy case. There is no requirement that a company be 'insolvent' to commence a voluntary bankruptcy case. Rather, case law has developed to require only that a petition be filed in good faith. Immediately upon filing a petition, the debtor obtains the benefit of an automatic stay. The stay prohibits most creditors from taking actions against the debtor and its property on account of pre-petition liabilities or agreements without express authorisation from the bankruptcy court.16 Thus, the stay gives the debtor the necessary 'breathing space' to complete its reorganisation or orderly liquidation consistent with the terms of the Bankruptcy Code.

A company hoping to reorganise or liquidate with its management in place will file a petition under Chapter 11; a company with no option but to liquidate under court supervision will commence a Chapter 7 case. Banks, savings and loan associations, insurance companies, stockbrokers and commodity brokers are not eligible to file for Chapter 11 protection. In general, these types of entities are liquidated under other federal or state winding-up laws or, in the case of stockbrokers and commodity brokers, under their own sub-chapter of the Bankruptcy Code.17

Unlike many insolvency regimes in other countries, in a Chapter 11 case, the debtor's management and directors generally remain in place and continue to manage the business and guide the restructuring (the filing entity is referred to as a debtor-in-possession).18 A trustee is rarely appointed to oversee a Chapter 11 debtor's operations unless the situation suggests that one is necessary.19 By contrast, in a Chapter 7 case, a trustee is appointed to manage the liquidation.

The bankruptcy court judge is typically heavily involved in the bankruptcy case. Indeed, many of the debtor's activities (e.g., financing, major asset sales, plan of reorganisation) must be brought to the bankruptcy court judge for approval. Also, the US Trustee (UST),a representative of the Department of Justice, acts as a 'watch dog' over the debtor's case - particularly at the outset before creditors have had time to organise. In a Chapter 11 case, the debtor-in-possession's actions will often be subject to scrutiny by one or more 'official' committees appointed by the UST.20 The most common official committee is one composed of unsecured creditors. In larger cases, the committee typically retains its own professionals (including counsel) to represent the unsecured creditors' interests, and the debtor pays for the cost of these professionals. In some cases, equity holders or retirees will convince the UST to appoint a separate committee for their constituents, especially in cases in which it appears the debtor may be solvent. Other official committees can be formed to represent other creditor groups, although such committees are rare, except in cases driven by mass torts such as asbestos liability.

The goal of a debtor in commencing a Chapter 11 case is to confirm and consummate a Chapter 11 reorganisation plan. Unless a trustee has been appointed, the debtor initially has the exclusive right to file a reorganisation plan.21 The exclusivity period, however, is not indefinite. Indeed, with the bankruptcy court's permission, plan exclusivity can be extended, but only to a maximum of 18 months after the petition date.22

Before a debtor can solicit votes on its reorganisation plan, it must provide creditors with a disclosure statement that has been approved by the bankruptcy court.23 The bankruptcy court does not approve the contents of the disclosure statement; rather, its role is to ensure that the disclosure statement contains 'adequate information' to permit a creditor to make an informed decision to accept or reject the related plan. Following approval of the adequacy of the disclosure statement,24 the debtor may solicit votes from creditors and equity holders entitled to vote on the plan. Parties who are entitled to vote on the plan are those whose debt claims or equity interests are being affected by the plan, unless they receive no distribution, in which case they are deemed to have rejected the plan. Groups of creditors and equity holders will be categorised into different 'classes'. If the requisite votes are received, the debtor will seek confirmation, or approval, of the plan by the bankruptcy court.

Aside from the required votes, the most critical requirement of the Bankruptcy Code for the plan is the 'best interests of creditors test'.25 This test requires that each creditor either accept the plan or receive under the plan a distribution equivalent to what it would receive if the debtor were to liquidate rather than reorganise.26 In some cases, the test requires valuation of property given to dissenting creditors. Because valuation is a complex and fact-intensive undertaking, a 'best interests fight' can lead to time-consuming and expensive litigation.

The second critical requirement is that at least one 'class' of claims votes for a plan if there is a class of impaired – or affected – claims. For this vote, the votes of insiders do not count. A class will be deemed to accept the plan if two-thirds in amount and more than 50 percent in number of creditor class members vote in favour of it. In the event that equity security holders are proposed to receive a distribution, classes of equity security holders must vote for the plan by at least two-thirds in amount.

Usually, at least one class will either affirmatively reject or be deemed to have rejected the plan because that class is not slated to receive a distribution under the plan. In those cases, the debtor can confirm its plan by 'cramming down' these creditors or equity security holders. 'Cram down' requires the debtor to prove that the plan does not discriminate unfairly and is fair and equitable with respect to each class of claims or interests that is impaired under the plan and has not accepted it.27 The 'fair and equitable' test is fairly straightforward and basically follows an absolute priority waterfall, under which secured creditors are entitled to full payment (at least over time) before unsecured creditors and equity holders receive a distribution. Despite this rather simplistic concept, valuation and issues regarding the present value of future payments to secured creditors are often hotly contested. The 'unfair discrimination' requirement is more difficult to grasp but, at a minimum, it prevents creditors and interest holders with similar legal rights from receiving materially different treatment under a proposed plan without compelling justification for doing so.

Confirmation of a reorganisation plan provides a reorganising Chapter 11 debtor with the fresh start that most debtors hope to obtain by reorganising under the Bankruptcy Code. The discharge that the debtor receives under the Bankruptcy Code is key to the 'fresh start'. This discharge bars creditors and equity security holders from looking to the debtor for satisfaction of claims owed to them prior to the commencement of the Chapter 11 case. Rather, their sole source of recovery is the distribution proposed to be made to them under the plan. Corporate debtors liquidating under either Chapter 7 or Chapter 11 of the Bankruptcy Code, however, do not obtain a discharge.

i Absolute priority rule

A basic premise under the Bankruptcy Code is that, in the absence of consent,28 distributions to creditors must follow the 'absolute priority rule'. In applying this rule, lower priority creditors may receive a distribution only after more senior classes are paid in full.29 Secured creditors are first in the priority scheme. Secured claims typically include pre-petition lenders and trade creditors with security interests (including holders of mechanics' liens and materialmen's liens). 'Administrative expense' claims are second in priority. Included in this bucket are claims relating to the post-petition operations of the debtor, and 'cure' claims that arise when debtors 'assume', or agree to be bound by, pre-existing contracts. The Bankruptcy Code also elevates to administrative expense priority status certain pre-petition claims of vendors of goods that would otherwise be treated as general unsecured claims. Next in order of priority come 'priority claims', which include certain pre-petition wages and commissions, employee benefit plan contributions, unsecured claims in connection with certain prepayments for goods or services from the debtor (e.g., the pre-petition purchase of goods 'laid away' with the debtor, up to a cap) and certain taxes. A Chapter 11 reorganisation plan must provide for payment of administrative expense claims and priority claims in full on the plan's effective date, although individual creditors may agree to a payout over time.

General unsecured claims, in terms of priority, come after secured claims, administrative claims and priority claims, but before subordinated debt claims.30 Equity interests (including equity-related damage claims that are treated as equity) are lowest on the distribution 'waterfall' and, as a result, equity holders rarely receive a bankruptcy distribution.

ii Treatment of contracts in bankruptcy

A debtor generally has the power to determine those executory contracts and unexpired leases by which it will continue to be bound following its reorganisation. A contract is usually found to be 'executory' when both the debtor and the non-debtor party to the contract have material performance obligations outstanding. If the debtor chooses to assume (or keep) a contract, it will be bound under all the terms of the agreement. Alternatively, if the debtor no longer seeks to be bound by the agreement, it will 'reject' it. Upon rejection of a contract, the debtor is no longer required to perform and the contract is deemed breached as of the date the bankruptcy commenced. Damages resulting from such a breach are referred to as 'rejection damages' and are generally given the lowest priority status (i.e., prepetition general unsecured claims). Under certain circumstances, a debtor may be able to assign its interest in a contract or lease to a third party.31

In the event a debtor does not assume an agreement, the default option under the Bankruptcy Code is rejection.32 The deadline to make the assumption or rejection decision with respect to unexpired leases and executory contracts (other than leases for non-residential real property) is the date a Chapter 11 plan is confirmed by the bankruptcy court. The deadline for a debtor to assume or reject an unexpired lease for non-residential real property can be much sooner (i.e., generally 210 days after commencement of the bankruptcy case, absent landlord consent). In a case where leased real property locations number in the hundreds, as in large retail cases, the debtor should make preliminary decisions on which leases it wants to assume or reject prior to commencing its bankruptcy case, and thereby attempt to avoid assuming leases it may not ultimately need.

iii Security interests

In the United States, Article 9 of the Uniform Commercial Code (Article 9 and the UCC, respectively), as adopted by each of the 50 states, generally applies to any security interest created by contract in personal property and fixtures to secure payment or other performance of an obligation.33 There are three components to the creation and enforcement of a security interest under Article 9 – attachment, perfection and priority. Under Article 9, a security interest attaches to collateral at the moment it becomes enforceable against the debtor. Only an attached security interest may be perfected under Article 9. Perfection is the process by which a secured party gives public notice of its security interest in collateral. A perfected security interest will prevail over claims of an interest in collateral by other parties (including liens of creditors using the judicial process to obtain liens on the collateral). State law, generally uniform throughout the United States, will dictate the method for perfecting a consensual security interest.

In many cases, two or more creditors may have security interests in the same collateral. In such cases, Article 9 provides general rules as to the ranking of security interests – that is, which security interest takes priority over the others. As a general rule, an earlier-secured party will prevail over later-secured creditors. There are, however, exceptions to this general rule and, therefore, practitioners must refer to Article 9 in the applicable jurisdiction relevant to a particular transaction or consult local counsel.

Article 9 has a critical interplay with the Bankruptcy Code. Upon the bankruptcy filing, the debtor steps into the role of a 'hypothetical lien creditor'.34 This means, in general, that it may void any unperfected security interest. Accordingly, it is critically important for secured creditors to ensure that their liens are properly perfected, especially when transacting business with a distressed company on the verge of bankruptcy. Again, while there are some variations in the details, security interests are usually 'perfected' by filing in a governmental registry or by taking possession of the collateral.

Whereas the UCC, which deals with the creation of security interests in personal property, is fairly uniform as adopted in all 50 states, security interests or mortgages in real property are controlled by different laws in each of the 50 states. However, most state laws provide for the recording of mortgages in local governmental offices. As with security interests in personal property, a bankruptcy trustee or debtor-in-possession can avoid improperly recorded mortgages by stepping into the shoes of state-law creditors.

iv Clawback actions

The Bankruptcy Code gives a debtor certain 'avoidance powers' to recover property transferred by the debtor to third parties before the petition date. Generally, these avoidance actions fall into two categories: the transfers had the effect of preferring one creditor over others; or the transfers were made for the purpose of hindering, delaying or defrauding creditors from collecting on their claims.

'Transfer' is defined broadly and encompasses payments as well as the granting and perfection of liens. Transfers that the debtor can prove to be fraudulent or preferential can be treated as voidable transfers. In many instances it is unnecessary to prove that the debtor or the recipient, or both, had a wrongful motive – the Bankruptcy Code is concerned only with ensuring equal treatment of creditors, even if that means unwinding well-intentioned arm's-length transfers of property. That said, the recipient of a voidable transfer has certain affirmative defences to shield all or a portion of the transfer from the debtor.

The most common voidable transfer is referred to as a 'preference'. Preferences are those payments a debtor makes to a pre-petition creditor on the 'eve' of the bankruptcy filing35 that allow such creditor to receive more on account of its claim than it would have received had it waited in line with other creditors and received its distribution in a hypothetical liquidation of the debtor pursuant to Chapter 7 of the Bankruptcy Code. The amount the creditor received in connection with the transfer will be voidable, subject to certain defences, such as receipt of the transfer in the ordinary course of business. To the extent the transfer is avoided, the preference recipient would have a claim against the debtor.

Fraudulent transfers that can be recovered include transfers made with the actual intent to hinder, delay or defraud creditors. Recoverable fraudulent transfers also include transfers for inadequate consideration when the debtor (transferor) is insolvent, undercapitalised or was unable to pay its debts as they became due. The Bankruptcy Code has its own fraudulent transfer provisions, but the debtor-in-possession may also prosecute such claims under similar state law provisions.


i Pre-planned bankruptcies: a quick escape from an all-out bankruptcy

Pre-planned bankruptcies continue to be a useful tool for debtors as they try to manage the time and expense of a US bankruptcy filing. There are two types of pre-planned bankruptcies: pre-packaged and pre-negotiated bankruptcies. Pre-packaged bankruptcies (pre-packs) are typically utilised by companies seeking to right-size their capital structures (e.g., to address maturities or deleverage from existing secured lender or bondholder indebtedness). The pre-packaged bankruptcy mechanism is not useful for companies seeking to achieve an operational turnaround or that need to modify other significant liabilities such as pension, retiree medical or mass tort liabilities.

In a pre-pack, the Chapter 11 case is commenced after the plan proponent has obtained the requisite votes to approve a reorganisation plan.36 In pre-negotiated plans, the creditors entitled to vote on the plan indicate their support for the plan before the commencement of the case,37 often in the form of a 'lock-up' agreement, but the vote occurs following the commencement of the case. It is common for pre-packs to last less than 60 days. Absent complications, pre-negotiated bankruptcies will take 45 to 60 days longer than a pre-pack. These periods are far shorter than the duration of Chapter 11 cases that are not pre-planned or that require operational fixes.

The pre-pack concept is an important negotiation tool as companies attempt to obtain concessions from their constituents. The requirement to achieve an accepting class of creditors (and, therefore, to bind non-accepting class members) under the Bankruptcy Code is two-thirds in amount and greater than one-half in number of those creditors who cast a vote. If acceptance is received from almost all of the creditors from whom votes are solicited, companies will often consummate the restructuring without filing for bankruptcy. Moreover, the threat of a pre-pack makes it less likely that a filing will be required, because there is little reason for creditors to withhold their acceptance once the company has received acceptances sufficient to satisfy the minimum threshold for an accepting class in the Chapter 11 context.

Pre-planned Chapter 11 filings were less common in 2018 than in 2017; 10 per cent of all public company Chapter 11 filings were pre-planned (versus 23 per cent in 2017).38 Notably, the largest Chapter 11 filing in 2018 was a pre-packaged case: iHeart Media, Inc. filed with US$12.8 billion in pre-petition assets. In 2019, two pre-packaged cases have broken records for the shortest Chapter 11 case. FullBeauty Brands emerged from bankruptcy just 22 hours after filing for Chapter 11 protection in January 2019, a record that was beaten only three months later when Sungard Availability Services completed its Chapter 11 proceeding in only 20 hours.39

ii Active industries: oil and gas, power and retail

Filings by the oil and gas and energy industry, and retail and supermarket industry continued to dominate public company filings in 2018, comprising 22 per cent and 17 per cent of total filings, respectively.40 Three of the year's 10 largest public filings came from the oil and gas and energy industry: FirstEnergy Solutions Corp, Aegean Marine Petroleum Network Inc and EV Energy Partners, LP. However, it is the retail industry that continues to dominate headlines. Sears Holding Corporation was the second-largest public filing in 2018, with US$7.3 billion in pre-petition assets. Claire's Stores, Southeastern Grocers, LLC and The Bon-Ton Stores Inc were also among the top 10 largest public company filings, while other notable filers included Tops Holding II Corp, Nine West, Mattress Firm, David's Bridal, Brookstone, Rockport, Walking Company Holdings and Remington Outdoor. The trend has continued in the first quarter of 2019, with filings by Diesel, Charlotte Russe, FullBeauty Brands, Payless, and Gymboree, among others. Notably, this was the second Chapter 11 filing for Nine West, Brookstone, Payless and Gymboree, and the third for Southeastern Grocers. Toys R Us Inc, which filed for Chapter 11 protection in 2017, recognised it would not be able to restructure and commenced liquidation proceedings in 2018.

One notable bankruptcy filing was the Chapter 11 cases filed by Pacific Gas and Electric Company and its parent on 29 January 2019.41 PG&E, incorporated in 1905, is the biggest utility company in the United States and the largest energy company in California. There are approximately 24,000 employees who carry out PG&E's primary business – the transmission and delivery of energy via natural gas and electric service – to approximately 16 million people throughout a 70,000-square-mile service area. As widely reported, California suffered several devastating wild fires in 2017 and 2018 that caused billions of dollars of property damage and injured and killed scores of people. PG&E may be liable for a substantial portion of the claims arising from the fires pursuant to the doctrine of 'inverse condemnation' (a strict liability theory applicable in California and a small number of other states) because its transmission lines and equipment may have been the originating source of some of the fires. Its bankruptcy filing was primarily motivated by a need to addresses these damage claims.

The PG&E bankruptcy is massive both in size and complexity. Upon the bankruptcy filing, California Governor Gavin Newsom stated: 'My administration will continue working to ensure that Californians have access to safe, reliable and affordable service, that victims and employees are treated fairly, and that California continues to make forward progress on our climate change goals.'42 This remains an interesting bankruptcy case to follow because of its complexity and the potential impact that public policy decisions will have on all of PG&E's stakeholders and the citizens of California.

iii Case law developments

Trademark and bankruptcy law at the Supreme Court

In Mission Product Holdings, Inc v. Tempnology, LLC, the US Supreme Court held that a debtor's right to reject executory contracts pursuant to Section 365(a) of the Bankruptcy Code does not entitle a debtor to rescind trademark licenses. In so finding, the Court resolved a long-standing circuit split regarding whether the special protections granted to intellectual property (IP) licences under Section 365(n) extend to trademark licences.

As explained in Section II.ii, a debtor's rejection of an executory contract under Section 365 of the Bankruptcy Code generally constitutes a breach of that contract, excusing the debtor from future performance and resulting in a claim for damages. In contrast, Section 365(n) of the Bankruptcy Code provides that an intellectual property licensee's right to use a non-exclusive licence cannot be unilaterally terminated upon the debtor's decision to reject the licence. Instead, the licensee may elect to retain its rights under the license agreement for the remainder of the licence term.43 However, Congress deliberately excluded trademarks from the Bankruptcy Code's definition of intellectual property,44 and courts have split regarding whether Section 365(n) applies to trademark licences.45

The debtor in Mission Products, Tempnology, licensed patents and trademarks for stay-cool sportswear fabric to Mission Products. The licence permitted either party to terminate for convenience, to be followed by a two-year wind-down period. Mission Products terminated the licence. Fifteen months later Tempnology filed for Chapter 11 protection and rejected the trademark licence held by Mission Products. The Court of Appeals for the First Circuit ruled that Section 365(n) did not apply and held the rejection of the trademark licence terminated Mission Product's right to use the licensed marks.46

In overturning the First Circuit's decision, the Supreme Court ruled that 'both section 365's text and fundamental principles of bankruptcy law' supported the conclusion that rejection of an executory licence – including a trademark licence – operates only as a breach, not as a rescission that would allow a debtor to unilaterally revoke an ongoing trademark licenses. The debtor may stop performing its obligations under the trademark licence, but the licensee is free to continue using the license pursuant to its terms. The decision brings welcome clarity to an area of the law that has long been unsettled.

Make wholes and impairment

In In re Ultra Petroleum Corp47 the Court of Appeals for the Fifth Circuit unequivocally concluded that a debtor's plan of reorganisation does not impair a creditor by refusing to pay an amount the Bankruptcy Code independently disallows. Less emphatically, the court held that make whole amounts will generally, if not always, be considered unmatured interest. The decision is a significant one for fixed-rate lending markets, because it means that debtors in the Fifth Circuit may be able to avoid paying make whole amounts without impairing a creditor's claims.

Ultra Petroleum Corp and its subsidiaries (Ultra) were an oil and gas exploration and production company forced into bankruptcy by the catastrophic decline in oil and gas prices that occurred in 2015 and 2016. During the pendency of Ultra's bankruptcy cases, oil prices rebounded and Ultra became solvent. One of the Ultra debtors was the borrower under several debt agreements, which provided that the debtor's bankruptcy constituted an event of default requiring the payment of a contractual make whole amount and post-petition interest at contractual default rates. The debtors' plan did not pay the make whole amount and proposed to pay post-petition interest at the (far lower) federal judgment rate. Nonetheless, the debtors claimed their proposed plan of reorganisation paid all creditors in full and impaired no one, because the portions of the creditors' claims that were unpaid were specifically disallowed by the Bankruptcy Code. Hence it was the Bankruptcy Code, not the debtors' plan, that impaired the creditors. Specifically, they argued the make whole amount constituted a claim for 'unmatured interest', disallowed under Section 502(b)(2) under the Bankruptcy Code, or it was an unenforceable liquidated damages provision under New York law. Similarly, the Bankruptcy Code only entitled the creditors to post-petition interest at the 'legal rate', as provided by Section 726(a)(5) of the Bankruptcy Code, which is the federal judgment rate under 28 USC Section 1961.

The bankruptcy court found that the plan's failure to pay the creditors' full claim rendered them impaired, regardless of whether the full amount of the creditors' claim was allowed under the Bankruptcy Code. The court found that the make whole was an enforceable liquidated damages provision under New York contract law,48 and did not consider whether it constituted unmatured interest.

The Fifth Circuit vacated and remanded. The court characterised the question as 'whether [a] rich man's creditors are 'impaired' by a plan that paid them everything allowed under the Bankruptcy Code'.49 Where the bankruptcy court had answered that question with a 'yes',50 the Fifth Circuit disagreed. The court distinguished between 'Bankruptcy Code impairment' and 'plan impairment', concluding '[w]here a plan refuses to pay funds disallowed by the Bankruptcy Code, the Bankruptcy Code – not the plan – is doing the impairing.'51

The Fifth Circuit found that the make whole payment constituted unmatured interest under Section 502(b) of the Bankruptcy Code, because it was the 'economic equivalent' of interest (intended to compensate the lender for lost interest) and that it was 'unmatured' because it only became due as a result of the filing.52 Therefore, the debtors were not required to pay the make whole amount under the Bankruptcy Code. However, there was a possibility the debtors might be required to pay the make whole if, on remand, the bankruptcy court determined that the pre-Bankruptcy Code rule requiring solvent debtors to pay post-petition interest at the contract rate survived the enactment of Section 502(b)(2). The Fifth Circuit expressed doubt that it did.53

Finally, on the matter of the appropriate rate of post-petition interest, the Fifth Circuit determined that the creditors had no legal right to post-petition interest at the contract rate, because the Bankruptcy Code is silent regarding post-petition interest on unimpaired claims in Chapter 11 cases.54 The Fifth Circuit determined the appropriate rate was either the rate authorised by Section 726(a)(5) or some other rate supported by the equities of the case, and remanded the issue to the bankruptcy court to determine which should apply.55

Horizontal gifting

The US District Court for the District of Delaware decision in Hargreaves v. Nuverra Environmental Solutions Inc56 adds some color to the law on the law of gifting in Delaware by distinguishing between 'horizontal' gifting and 'vertical' gifting.

The debtor, Nuverra, filed a prepackaged plan of reorganization pursuant to which secured creditors would exchange their debt for equity in the reorganised company. The secured creditors agreed to 'gift' payments to the unsecured creditor classes, who would otherwise receive no distribution under the plan. 'Gifting' occurs when a structurally senior class of creditors provides some recovery to a more junior class of claims or equity holders, in exchange for the more junior class's support of a proposed plan or asset sale. Courts have been inconsistent in their approach to gifting. In many, but not all, cases it has been found to violate the absolute priority rule.

In Hargreaves, a class of unsecured noteholders were gifted a combination of new stock and cash amounting to a 4–6 per cent recovery, while a class of unsecured trade creditors were gifted full payment of their claims. The class of noteholders voted to reject the plan. A noteholder, David Hargreaves, objected to confirmation and to being crammed down under the plan on the grounds that the plan's proposed treatment of the dissenting noteholder class discriminated unfairly against the class, in violation of the Bankruptcy Code's cram-down laws, because it received less value under the plan than the unsecured trade creditor class. Hargreaves also objected to the separate classification of the noteholders and trade creditors. The Bankruptcy Court for the District of Delaware confirmed the plan.

The District Court for the District of Delaware found the appeal was equitably moot, but held the confirmation order would have been affirmed for the reasons articulated by the bankruptcy court. In finding that the plan did not unfairly discriminate, the court distinguished between 'vertical' gifting – forbidden in the Third Circuit – and 'horizontal gifting' – which is not foreclosed under Third Circuit law. Vertical gifting occurs when a senior class gifts a recovery to a lower class, skipping over an intermediate class of impaired creditors, so that the absolute priority rule is violated. This case involved horizontal gifting, where unequal gifts are given by a secured creditor to two similarly situated classes of junior creditors without implicating the absolute priority rule. The District Court concluded that the different gifts given to the noteholders and trade creditors gave rise to a rebuttal presumption of discrimination, but that the presumption was rebutted by the fact that the senior creditor had a good reason to satisfy fully the claims of the unsecured trade creditors, as they were critical to the success of the reorganised debtors. The importance of the trade creditors also led the bankruptcy court to conclude that the separate classification of the noteholders and trade creditors was reasonable. 57

Hargreaves has been appealed to the Court of Appeals for the Third Circuit.

Third-party releases

In Opt-Out Lenders v. Millennium Lab Holdings II, LLC (In re Millennium Lab Holdings II, LLC),58 the US District Court for the District of Delaware affirmed that the bankruptcy court had jurisdictional authority to grant non-consensual third-party releases as part of an order confirming a Chapter 11 plan, notwithstanding that the plan released racketeering claims against certain parties.

Third-party releases (the extinguishment of a non-debtor third party's claim against a non-debtor third party, without consent of the releasing party) have been the subject of considerable judicial scrutiny and a topic of controversy among courts. Section 524(e) of the Bankruptcy Code provides that 'discharge of a debt of the debtor does not affect the liability of any other entity on . . . such debt.'59 However, courts in many (though not all) circuits have determined that third-party releases may be permissible under certain circumstances. The ability of bankruptcy courts to grant third-party releases was thrown into question by the decision of the Supreme Court in Stern v. Marshall,60 in which the court found that the United States Constitution forbids Article 1 judges – including bankruptcy court judges – to render decisions as courts of the United States. The court found that only Article 3 judges, such as those that sit on district courts, have that authority. Although Chief Justice John Roberts stated that Stern was a narrow decision that would not cause material changes to the administration of bankruptcy cases,61 the decision threw into question bankruptcy judges' jurisdictional authority. Its reverberations continue to be felt today, as litigants and courts try to establish anew what powers and responsibilities bankruptcy courts possess, and where those powers and responsibilities are constrained by constitutional limits.

In Millennium, a group of creditors asserted that, under Stern, bankruptcy courts do not have the constitutional authority to grant third-party releases and a reorganisation plan that contains such a release may only be confirmed by an Article 3 court. The Millennium debtors' proposed plan of reorganisation included US$325 million in plan funding provided by four equity holders, to be used, in part, to fund a settlement with federal regulators. The plan proposed to release the equity holders' claims against the debtors and against non-consenting third parties. The creditors, who were asserting racketeering claims against the equity holders, argued that the bankruptcy court did not have subject matter jurisdiction to grant non-consensual third-party releases. They argued that the bankruptcy court had no authority to enter final judgment on the racketeering claims, and that the grant of non-consensual releases that released the creditors' racketeering claims against the equity holders did precisely that. The bankruptcy court found that it had jurisdiction to grant the third-party releases, because the 'operative proceeding' before the court was confirmation of the plan rather than litigation of the racketeering claims, and confirmed the plan.

The US District Court for the District of Delaware affirmed the bankruptcy court's order confirming the plan. It agreed with the lower court that the 'operative proceeding' before the court was the confirmation of the Chapter 11 plan, not the litigation of the racketeering claims.62 Plan confirmation is an enumerated core proceeding, meaning, under Stern, the bankruptcy court had statutory authority to approve the third-party releases as part of the plan. The court quoted with approval the bankruptcy court's conclusion that '[t]aking the position that third party releases in a plan are equivalent to [a constitutionally] impermissible adjudication of the litigation being released is, at best, a substantive argument against third party releases, not an argument that confirmation orders containing releases must [under Stern] be entered by a district court.'63 The decision has been appealed to the Court of Appeals for the Third Circuit.

A few weeks after the Millennium decision, the US District Court for the Southern District of New York reached a similar conclusion in Lynch v. Lapidem Ltd (In re Kirwan Offices SARL).64 The debtors' plan of reorganisation included exculpation and injunction clauses that enjoined anyone from attempting to sue Lapidem in any other forum in connection with the events arising from Kirwan's bankruptcy proceedings and reorganisation.65 The court, in approving the plan, concluded that '[a] bankruptcy court acts pursuant to its core jurisdiction when it considers the involuntary release of claims against a third-party, non-debtor in connection with the confirmation of a proposed plan of reorganization, which is a statutorily defined core proceeding.'66

Bankruptcy blocking provisions

In Franchise Services of North America, Inc v. Macquarie Capital (USA), Inc (In re Franchise Services of North America, Inc),67 the Court of Appeals for the Fifth Circuit affirmed the bankruptcy court's order dismissing as unauthorised a bankruptcy filing made by a debtor without the consent of its sole preferred equity holder, who held a blocking position enabling it to prevent a bankruptcy filing. The court found that neither federal law nor Delaware corporate law prevented the equity holder from exercising its blocking position, and that without the preferred equity holder's consent the filing was invalid.

Macquarie Capital (USA) (Macquarie) made a US$15 million preferred equity investment, via an investment vehicle, in Franchise Services of North America (FSNA), making it FSNA's single largest equity holder. In exchange for the investment, FSNA agreed to reincorporate in Delaware and for its certificate of incorporation to incorporate a blocking provision, which specified that the consent of a majority of each class of the debtor's common and preferred shareholders was required to 'effect any liquidation event.' This blocking position meant Macquarie could prevent a voluntary bankruptcy filing by the company by withholding consent. Separately, FSNA owed Macquarie US$3 million in advisory fees in connection with the transaction.

FSNA filed for Chapter 11 protection without obtaining Macquarie's consent. Macquarie challenged the filing as ultra vires. FSNA argued that the blocking position was invalid as contrary to public policy because Macquarie was a creditor and not a bona fide equity owner. The bankruptcy court flatly rejected this argument, and the appeal was certified to the Court of Appeals for the Fifth Circuit.

The Court of Appeals was presented with three broad questions: (1) whether a blocking provision or golden share that gives a party the ability to prevent a corporation from filing from bankruptcy is valid, or contrary to federal public policy; (2) whether such a provision can be exercised by an entity that is both a creditor and an equity holder of the debtor; and (3) under Delaware law, whether a certificate of incorporation contains a blocking provision, and if so, whether the holder of the provision has a fiduciary duty to exercise it in the best interests of the corporation. The court declined to answer these broad questions and instead limited its analysis to the narrow facts of the case, finding that nothing in federal or Delaware law prevents the amendment of a corporate charter to allow a non-fiduciary shareholder, fully controlled by an unsecured creditor, to prevent a voluntary bankruptcy petition.68 The fact that a bona fide equity shareholder is also an unsecured creditor does not prevent it from exercising its right to vote against a bankruptcy petition. The court emphasised that it was not presented with a case where a creditor had somehow contracted for the right to prevent a bankruptcy, or where the equity interest was a ruse,69 suggesting a different outcome would be possible – or even likely – on those facts.


i Background on Chapter 15

In 2005, Congress added Chapter 15 to the Bankruptcy Code. Chapter 15 'incorporates the Model Law on Cross-Border Insolvency to encourage cooperation between the United States and foreign countries with respect to transnational insolvency cases'.70 Chapter 15 is based on a 'rigid recognition standard' that one court labelled 'consistent with the general goals of the Model Law'.71 Thus, if a US bankruptcy court denies recognition of a foreign proceeding, Section 1509(d) of the Bankruptcy Code provides that 'the court may issue any appropriate order necessary to prevent the foreign representative from obtaining comity or cooperation from courts in the United States'.72 This has been interpreted to mean that Chapter 15 recognition is now the sole form of relief in the United States with respect to foreign insolvency proceedings.73

A foreign representative can obtain recognition under Chapter 15 of the Bankruptcy Code 'by the filing of a petition for recognition of a foreign proceeding under Section 1515'.74 Two types of recognition of a foreign proceeding are possible under Chapter 15: recognition as a foreign main proceeding or recognition as a foreign non-main proceeding. Greater relief is available to a foreign representative of a foreign main proceeding than for a representative of a foreign non-main proceeding.

In order for a US court to recognise a foreign proceeding as a main proceeding, the foreign proceeding must be 'pending in the country where the debtor has the centre of its main interests',75 (COMI). COMI is not defined in Chapter 15. Section 1516(c), however, sets out a presumption that the debtor's registered office is the COMI '[i]n the absence of evidence to the contrary'.76 Moreover, one of the first bankruptcy decisions to analyse the matter defined a company's COMI as a debtor's 'principal place of business' under concepts of United States law'.77 Indeed, the concept of COMI is lifted from the EU Regulation, which defines COMI as 'the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties'.78 On the other hand, the Second Circuit has rejected the notion that 'principal place of business' analysis should be used,79 but did note that the concept is still useful in determining the factors that point to a COMI. The court went on to say that 'any relevant activities, including liquidation activities and administrative functions, may be considered in the COMI analysis'.80

The Second Circuit also provided more guidance in determining the relevant period to examine in establishing a debtor's COMI, concluding that the relevant analysis should be based on the debtor's 'activities at or around the time the Chapter 15 petition is filed [...but] that a court may consider the period between the commencement of the foreign insolvency proceeding and the filing of the Chapter 15 petition to ensure that a debtor has not manipulated its COMI in bad faith'.81

Lacking the required COMI, a foreign proceeding may be recognised as a non-main proceeding under Chapter 15 if the foreign proceeding is 'pending in a country where the debtor has an establishment'.82 'Establishment' is defined in Chapter 15 as 'any place of operations where the debtor carries out a nontransitory economic activity'.83 Determining whether a debtor has an establishment in the foreign proceeding jurisdiction 'is essentially a factual question, with no presumption in its favour'.84 At least one court has held that non-main recognition is restricted to a jurisdiction in which a debtor has assets.85

The year 2018 saw 100 Chapter 15 filings, up from 86 in 2017.86

ii Case law developments: extraterritoriality and avoidance law

As discussed in Section II.iv, a debtor or trustee's ability to recover estate funds via the use of avoidance actions is a powerful tool in bankruptcy. However, the law on the extraterritorial application of the Bankruptcy Code's avoidance action provisions is unsettled, even as cross-border bankruptcy cases implicating those provisions become more common.

There is a general presumption against extraterritorial application of US law, 'that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States'.87 In the Southern District of New York, the issue of whether Congress intended for the Bankruptcy Code's avoidance action provisions to apply extraterritorially is particularly vexed, with courts in the same district reaching conflicting decisions. Some, such as the bankruptcy court in the recent case In re CIL Limited, conclude that 'nothing in the language of Sections 544, 548 and 550 of the Bankruptcy Code suggests that Congress intended those provisions to apply to foreign transfers.'88 Other courts point to Congress's definition of 'property of the estate' in Section 541 of the Bankruptcy Code, which includes all the debtor's property 'wherever located and by whomever held',89 as evidence that Congress did not intend to exclude extraterritorial transfers from the ambit of the Bankruptcy Code's avoidance actions.90

The Court of Appeals for the Second Circuit had the opportunity to resolve this issue in In Re Picard, Trustee for Liquidation of Bernard L. Madoff Investment Securities LLC,91 but declined to do so. Nonetheless, the court introduced some welcome clarity to the law by demonstrating that the presumption against extraterritoriality may not be a bar to recovering property fraudulently transferred abroad, so long as the initial fraudulent transfer is rooted in the United States. Looking closely at the language of Section 548(a)(1), the court noted the Section 'allows a trustee to 'avoid any transfer . . . of an interest of the debtor in property . . . made . . . with actual intent to hinder, delay or defraud'.92 The language of the Section focuses on the initial transfer, leading the court to conclude that 'when a trustee seeks to recover subsequently transferred property under section 550(a), the only transfer that must be avoided is the debtor's initial transfer.'93 Hence, so long as the initial transfer of property constitutes domestic activity, the fraudulently transferred property may be traced to its ultimate transferee, wherever located, and recovered.

In a similar vein, the Bankruptcy Court for the Southern District of New York found in Fairfield Sentry Ltd v. Amsterdam (In re Fairfield Sentry Ltd),94 that the safe harbour provisions in Section 546(e) of the Bankruptcy Code, (which shield certain transferees from avoidance actions) apply extraterritorially, through the operation of Section 561(d) of the Bankruptcy Code. Section 561(d) specifically provides that the Bankruptcy Code's safe harbours 'apply in a case under chapter 15 . . . to limit avoidance powers to the same extent as in a proceeding under chapter 7 or 11 of this title'.95 Hence, the safe harbour was a valid defence to 'proceedings brought by foreign representatives in a chapter 15 case seeking to avoid purely foreign transfers under foreign insolvency laws'.96


1 J Eric Ivester is a partner at Skadden, Arps, Slate, Meagher & Flom LLP. Mr Ivester acknowledges and gratefully appreciates the substantial work and assistance provided by Julie Lanz, an associate at the firm, in preparing this chapter.

2 US Department of Commerce, 'Gross Domestic Product, First Quarter 2019 (Advance Estimate)', 26 April 2019; available at https://www.bea.gov/news/2019/gross-domestic-product-1st-quarter-2019-advance-estimate. The advance estimate is based on source data that is either incomplete or subject to further review, and the estimate will be revised as the Bureau of Economic Analysis continue its analysis.

3 US Department of Commerce, 'Gross Domestic Product by Industry: Fourth Quarter and Annual 2018', 19 April, 2019; available at https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=2#reqid=19&step=2&isuri=1&1921=survey.

4 Jim Tankersley, The New York Times, 'Fed, Dimming its Economic Outlook, Predicts No Rate Increases This Year', 20 March 2019; available at https://www.nytimes.com/2019/03/20/us/politics/fed-rates.html 

5 id.

6 Bureau of Labor Statistics, 'Unemployment rate reaches 3.6% in April 2019, lowest since December 1969', 8 May 2019; available at https://www.bls.gov/opub/ted/2019/unemployment-rate-3-point-6-percent-in-april-2019-lowest-since-december-1969.htm 

7 Chris Isidore, CNN Business, '2018 was the worst year for stocks in 10 years, 31 December, 2018; available at https://www.cnn.com/2018/12/31/investing/dow-stock-market-today/index.html 

8 id.

9 Stephanie Landsman, CNBC, 'New chart shows market rebound off December low is reminiscent of the 1998 tech boom', 4 April 2019; available at https://www.cnbc.com/2019/04/04/new-chart-shows-market-rally-off-december-low-is-similar-to-1998-boom.html 

10 Jim Tankersley, The New York Times, 'Fed, Dimming its Economic Outlook, Predicts No Rate Increases This Year', 20 March 2019; available at https://www.nytimes.com/2019/03/20/us/politics/fed-rates.html 

11 United States Courts, 'Bankruptcy Filings Fall 2 Percent', 29 January, 2019; available at https://www.uscourts.gov/news/2019/01/29/bankruptcy-filings-fall-2-percent 

12 id.

13 Bankruptcy Data, 'Bankruptcy Data's 2018 Corporate Bankruptcy Review', 13 January, 2019.

14 id.

15 11 USC, Sections 101–1532.

16 The few exceptions include certain offsets under various financial contracts, taxes and the actions by certain governmental authorities who are asserting their police and regulatory powers. See 11 USC, Section 362(b).

17 Note, however, that holding companies of banks, insurance companies and brokers are eligible to file for Chapter 11 relief: thus the filings of Lehman Brothers Holdings Inc and the holding company of Washington Mutual Bank. Insurance companies are liquidated under state law procedures, which differ among the 50 states. Banks are liquidated under the Federal Deposit Insurance Act.

18 11 USC, Section 1107.

19 11 USC, Section 1104. Fraud is the main reason a trustee is appointed.

20 11 USC, Section 1103.

21 Note that if a Chapter 11 trustee is appointed, neither the debtor nor the Chapter 11 trustee has the exclusive right to file a plan. 11 USC, Section 1121(c)(1).

22 11 USC, Section 1121(d)(2)(A).

23 USC, Section 1125(b).

24 id. In some cases, the disclosure statement can be approved at the time the plan is approved.

25 See 11 USC, Section 1129(a)(7).

26 id.

27 11 USC, Section 1129(b)(1).

28 Consent is obtained through the votes of classes of claims and interests.

29 The payments may be simultaneous, provided that the senior creditor will eventually be paid the present value of their claims in full.

30 See, generally, 11 USC, Section 507(a).

31 11 USC, Section 365(f). See also 11 USC, Section 365(c) for additional assignment restrictions.

32 11 USC, Section 365(d)(1).

33 Each of the 50 states and the District of Columbia have adopted their own version of the UCC. All references to Article 9 contained herein are to Article 9 as set out in the model UCC. Practitioners are encouraged to refer to Article 9 as adopted in the jurisdiction relevant to each particular transaction, to consult local counsel, or do both.

34 See 11 USC, Section 544.

35 The reach-back period is generally 90 days, unless the transferee is an 'insider' of the debtor, in which case the reach-back period is one year.

36 11 USC, Section 1125(g) of the Bankruptcy Code provides that an acceptance or rejection of the plan may be solicited from a holder of a claim or interest before the commencement of the case, provided that such solicitation complies with applicable non-bankruptcy law.

37 The Bankruptcy Code requires that two-thirds in amount and more than one-half in number of a class of creditors vote to accept a plan for that class of creditors to be deemed to have accepted the plan. 11 USC, Section 1126(c).

38 BankruptcyData, 'BankruptcyData's 2018 Corporate Bankruptcy Review', 13 January 2019.

39 The cases were In re FullBeauty Brands Holdings Corp., Case No. 19-22185 (Bankr. S.D.N.Y.) and In re Sungard Availability Services Capital Inc., Case No. 19-22915 (Bankr. S.D.N.Y.).

40 BankruptcyData, 'BankruptcyData's 2018 Corporate Bankruptcy Review', 13 January 2019.

41 The case is In re PG&E Corporation and Pacific Gas and Electric Company, Docket No. 19-30088 (N.D. Cal.)

42 Eric Westervelt, NPR, 'California Power Provider PG&E Files for Bankruptcy in Wake of Fire Lawsuits,' 29 January, 2019; available at https://www.npr.org/2019/01/29/689591066/california-power-provider-pg-e-files-for-bankruptcy-in-wake-of-fire-lawsuits 

43 11 USC § 365(n).

44 11 USC § 101(35).

45 See, e.g., the seminal case in Lubrizol Enters, Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985) (the court held that rejection of an executory IP licence results in termination, a decision that prompted Congress to amend the Bankruptcy Code by adding section 365(n)), versus Sunbeam Products Inc. v. Chicago American Manufacturing, LLC, 686 F.3d 382 (7th Cir. 2012) (rejection of a trademark only terminates a debtor's obligations under a trademark licence, not the licensee's right to use the trademark pursuant to the terms of the license).

46 Mission Product Holdings, Inc. v. Tempnology (In re Tempnology), 879 F.3d 389 (1st Cir. 2018).

47 913 F.3d 522 (5th Cir. 2019).

48 In Re Ultra Petroleum Corp., 575 B.R. 361, 370-71 (Bankr. S.D. Tex. 2017).

49 913 F.3d at 537.

50 id.

51 id. at 542.

52 id. at 547-48.

53 id. at 549.

54 id at 547.

55 id at 550-51.

56 590 B.R. 75 (D. Del. 2018).

57 In re Nuverra Environmental Solutions, Inc. No. 17-10949 (Bankr. D. Del.), July 24, 2017 Hr'g Tr. at 5:5-6:24.

58 591 B.R. 559 (D. Del. 2018).

59 11 U.S.C. § 524(e).

60 564 U.S. 462 (2011).

61 id. at 501.

62 591 B.R. at 575.

63 id. at 576-77.

64 592 B.R. 489 (Bankr. S.D.N.Y. 2018).

65 id. at 499.

66 id. at 504.

67 891 F.3d 198 (5th Cir. 2018).

68 id. at 203, fn. 1.

69 id. at 207-08.

70 HR Rep No. 109-31(1), at 105 (2005), reprinted in 2005 USCCAN 88, 169.

71 In re Bear Stearns High-Grade Structured Credit Strategies Master Fund Ltd, 389 BR 325, 332 (SDNY 2008).

72 11 USC, Section 1504.

73 See Iida v. Kitahara (In re Iida), 377 BR 243, 257 n21 (BAP 9th Cir 2007) ('Subsections (b)(2), (b)(3), and (c) [of Section 1509] make it clear that Chapter 15 is intended to be the exclusive door to ancillary assistance to foreign proceedings').

74 11 USC, Section 1504.

75 11 USC, Section 1502(4).

76 11 USC, Section 1516(c).

77 In re Tri-Continental Exch Ltd, 349 BR 627, 629 (Bankr. ED Cal 2006).

78 In re Bear Stearns, 389 BR at 336 (quoting Council Regulation (EC) No. 1346/2000, Paragraph 13).

79 Morning Mist Holdings Ltd v. Krys (In re Fairfield Sentry Ltd), Case No. 11-4376, 2013 WL 1593348, at *6 (2nd Cir 2013).

80 id. at *8.

81 See id. at *8.

82 11 USC, Section 1502(5).

83 id. Section 1502(2).

84 In re Bear Stearns, 389 BR at 338.

85 id. at 339 ('In general, Section 1521(c) of the Bankruptcy Code limits the scope of relief available in a nonmain proceeding to relief related to assets located in the nonmain jurisdiction or closely connected thereto, while a plenary bankruptcy proceeding where the [debtors] are located would control the [debtors'] principal assets').

86 United States Courts, 'Table F-2 - Bankruptcy Filings (December 31, 2018)'; available at https://www.uscourts.gov/sites/default/files/data_tables/bf_f2_1231.2018.pdf 

87 EOC v. Arabian Am. Oil Co., 499 U.S. 244, 248 (1991) (quoting Foley Bros. v. Filardo, 336 U.S. 281, 285 (1949)).

88 LaMonica v. CEVA Group PLC (In re CIL Ltd.), 582 B.R. 46, 84-85 (Bankr. S.D.N.Y. 2018).

89 11 U.S.C. § 541.

90 See, e.g., Weisfelner v. Blavatnik (In re Lyondell), 543 B.R. 127 (Bankr. S.D.N.Y. 2016).

91 917 F.3d 85 (2019).

92 id. at 97.

93 id. at 98.

94 596 B.R. 275 (Bankr. S.D.N.Y. 2018).

95 11 U.S.C. § 561(d).

96 596 B.R. 275 at 310.