BCLP Global Restructuring & Insolvency Developments

Global Restructuring & Insolvency Developments

Other Posts

Main Content

Taggart v. Lorenzen, The State Of Bankruptcy Contempt Power Eight Months Later

So you (allegedly) violated a bankruptcy court order. Whether the debtor alleges you violated the terms of a confirmed plan, failed to provide certain notices required by the bankruptcy rules, violated the discharge injunction, or any other court order, you may be wondering what potential redress the debtor may seek. Although many violations of bankruptcy court orders and rules do not provide for a private right of action, many debtors seek to have their rights vindicated (in the form of the greatest vindicator, cash) through an action for contempt. These civil and criminal contempt actions allow debtors to collect their damages caused by a violation of a court order, provide courts the means to coerce compliance with their orders, and allow courts to punish

My Company Went Through Bankruptcy And All I Got Was This Lousy Release – How to Get a Non-Consensual Release of Third Parties in a Chapter 11 Plan

October 29, 2018

Categories

 

Officers and directors work hard to shepherd their company through bankruptcy. But, even after all that hard work, creditors can still turn around and sue them individually for alleged acts prior to the bankruptcy.  What kind of thanks is that?  A debtor wishing to protect these hard-working officers and directors may seek to include a third party release in the plan.  However, if all parties do not agree, third party releases over objecting classes are closely analyzed because they are considered a “dramatic measure to be used cautiously, and [] only appropriate in unusual circumstances.”  In re Dow Corning Corp., 280 F.3d 648, 658 (6th Cir. 2002).  Fortunately, this post will discuss the steps officers and directors may take with the debtor to increase the likelihood of plan approval, with third party releases intact, over the objections of some parties.

Initially, the debtor must look to where it

Circuit Split – Allowing Receiverships by Contract

“I think now that I’m older, I do think I’m the greatest receiver to ever do it.” -Randy Moss, Receiver, probably not talking about Fed. R. Civ. P. 66.

Editors’ Note: Will Easley of our Kansas City restructuring & insolvency practice knows about NFL receivers.  He also knows about the far more exciting receivers appointed under Federal Rule 66.  If you want to talk about either, or both, give him a call!

Even if you know the best receivers in the game, they cannot preserve your collateral if a court will not appoint them. In federal court, a receiver is usually only appointed when the plaintiff shows fraud or other threat to the collateral.  For creditors who have the Randy Moss (or the objectively better Jerry Rice) of receivers, and a provision allowing appointment in the loan documents, this may come as a shock. Currently, there is

The attorneys of Bryan Cave Leighton Paisner make this site available to you only for the educational purposes of imparting general information and a general understanding of the law. This site does not offer specific legal advice. Your use of this site does not create an attorney-client relationship between you and Bryan Cave LLP or any of its attorneys. Do not use this site as a substitute for specific legal advice from a licensed attorney. Much of the information on this site is based upon preliminary discussions in the absence of definitive advice or policy statements and therefore may change as soon as more definitive advice is available. Please review our full disclaimer.