Message from
the Chair:
As an advisory board member of
Bankruptcy 2015: Views from the Bench, I
invite you to attend this year's event in Washington, DC on
October 9, 2015. One of the most highly rated CLE conferences
hosted by the American Bankruptcy Institute (ABI) and
Georgetown University, Bankruptcy 2015: Views from the
Bench provides a unique opportunity for bankruptcy
practitioners to convene with bankruptcy judges for a full day
of outstanding CLE and networking opportunities.
This
year's feature presentation on the 2015 Supreme Court term
will be given by Professor Kenneth N. Klee, author of
Bankruptcy and the Supreme Court 1801-2014, published
in 2015. Another panel, featuring Judges Isicoff, Teel, and
Gambardella, will discuss the implications of Baker Botts
v. Asarco, while several panels will review the
recommendations of the Commission to Study the Reform of
Chapter 11. Additional small group breakout sessions will
address a variety of topics in a more intimate learning
environment.
For more information, please see www.abi.org/events/bankruptcy-2015-views-from-the-bench.
I hope you are able to attend this signature ABI
event.
Additional
Highlights:
This edition of The
Business Advisor also includes several new articles and a
critical update to an article published in the prior issue.
And finally, we share some news about our attorneys' recent
and upcoming professional activities and honors. We hope you
find this issue informative, and we welcome any feedback you
may have.
Karen A. Giannelli,
Esq. Chair, FRCR
Department
ARTICLES & CLIENT
ALERTS
Limited Liability
Company Interests as Property of a Debtor's Estate The
First Inquiry – Is the Operating Agreement Executory?
By: Lawrence A.
Goldman
Debtor, Inc.
("Debtor") commences a case under chapter 11 of the U.S.
Bankruptcy Code (the "Code"), and among Debtor assets is a
membership interest in ABA, LLC ("Company"). The operating
agreement of Company identifies various events that would
cause a "dissociation" of a member. One event is the
commencement of a bankruptcy proceeding involving a member.
Another event, in the case of Debtor, is Joe Smith ceasing to
have day-to-day control over the business affairs of Debtor.
Debtor continues to operate as a debtor in possession, and
Smith continues to run the day-to-day affairs of
Debtor.
Companion
article follows
■ ■ ■ ■ ■
Limited Liability
Company Interests as Property of a Debtor's
Estate Executory Agreements and the Conundrum of Section
365 By: Joshua R.
Elias
A companion article
sets a scenario in which Debtor Inc. ("Debtor") commences a
case under chapter 11 of the U.S. Bankruptcy Code (the
"Code"), and among Debtor's assets is a membership interest in
ABA, LLC ("Company"). The operating agreement of Company
identifies various events as causing a "dissociation" of a
member. One event is the commencement of a bankruptcy
proceeding involving a member. Another event, in the case of
Debtor, is Joe Smith ceasing to have day-to-day control over
the business affairs of Debtor. The companion article
addresses §541 of the Code, which applies when Debtor's
membership interest is reflected by a limited liability
company ("LLC") agreement that is non-executory, and surveys
cases analyzing whether an LLC agreement is executory or
non-executory.
■ ■ ■ ■ ■
The Continuing
Bayou Shores Saga – An Appeal and, Perhaps, a Circuit
Split By: David N. Crapo
In the
March 2015 edition of The Business Advisor – Healthcare
Focused Newsletter, I wrote about the success of Bayou
Shores SNF, LLC in using a bankruptcy filing with the U.S.
Bankruptcy Court for the Middle District of Florida to
preserve its Medicare and Medicaid provider agreements
notwithstanding the pre-petition issuance by the U.S.
Department of Health and Human Services (HHS) of a notice of
termination of Bayou Shores' Medicare provider agreement.
Following up, I wrote in the July 2015 The Business
Advisor – Healthcare Focused Special Alert, about the
reversal by the U.S. District Court for the Middle District of
Florida ("District Court") of Bayou Shores' success before the
Bankruptcy Court. On June 26, 2015, the District Court entered
an order ("Reversal Order") reversing: (i) the bankruptcy
court's order ("Injunction") enjoining the HHS and the Florida
Agency for Health Care Administration (AHCA), respectively,
from terminating Bayou Shores' Medicare and Medicaid provider
agreements; and (ii) those provisions of the Bankruptcy
Court's order ("Confirmation Order") confirming Bayou Shore's
plan of reorganization that approved Bayou Shores' assumption
of its provider agreements. [U.S.D.C. MD Fla. Docket
No. 8:14-cv-02816-JSM ECF Docket No. 72] The
Bayou Shores saga continues, with the parties now
before the U.S. Court of Appeals for the Eleventh Circuit, and
the prospect of a circuit split
looming.
■ ■ ■ ■ ■
Maximizing Bankruptcy
Protection in Software and SaaS Agreements By:
Luis J. Diaz, Charles H.
Chevalier,
and David N. Crapo Gibbons IP Law Alert,
September 28, 2015
In today's
digital age, cloud computing has lowered the barrier of entry
into many marketplaces by providing network access to a shared
pool of configurable computing resources. Cloud services allow
business to forego upfront capital costs on servers, network
infrastructure, and software allowing companies to focus on
establishing and differentiating its business instead of
worrying about its IT resources. Additionally, it is typically
a "pay as you go" service meaning that businesses can scale up
or down as needed in real time. However, entrusting a
third-party as the sole source of the company's network,
software, and data storage functionality puts the company at
risk of losing these services should the provider enter
bankruptcy.
■ ■ ■ ■ ■
Trade Creditors
Beware – Debtor's Setoff Rights Apply to Administrative
Expense Claims (Including Claims asserted under 11 U.S.C. §
503(b)(9)) By: Mark Conlan and Natasha
Songonuga Geneva Group International (GGI)
Forum, July 2015
In a May
5, 2015 decision, Judge Kevin J. Carey of the U.S. Bankruptcy
Court for the District of Delaware rejected certain trade
creditors' objections to the joint motion filed by the debtors
and the official committee of unsecured creditors in the ADI
Liquidation, Inc. (f/k/a AWI Delaware Inc.) chapter 11 cases,
jointly administered under Case No. 14-12092 (KJC), seeking
authorization to offset trade credits, vendor overpayments and
other amounts owed to the debtors against the creditors'
administrative and secured claims (the "Joint Motion"). In
granting the Joint Motion, Judge Carey concluded that the
Bankruptcy Code (including its underlying policies) and case
law provide ample support for allowing the debtors to exercise
their discretion in determining to first offset funds owed to
the debtors against a creditor's administrative and/or secured
claim (including Bankruptcy Code section 503(b)(9) claims)
before applying such setoff rights against the creditor's
general unsecured claims. See Docket No. 2052. The decision
highlights the risks trade creditors face in having their
administrative priority claims under section 503(b)(9) diluted
by a debtor's setoff rights.
DEPARTMENT HONORS &
AWARDS
The Network
Journal Honors Natasha Songonuga with "40 Under Forty"
Achievement Award
Natasha Songonuga,
a Director in the Financial Restructuring & Creditors'
Rights Department of Gibbons P.C., has been named among
The Network Journal's "40 Under Forty" for 2015. She
was profiled in the June edition of the publication, and
received the award at the organization's Annual "40 Under
Forty" Achievement Awards Dinner on June 18, 2015, in New York
City.
■ ■ ■ ■ ■
Natasha Songonuga
Named Among Profiles In Diversity Journal's "Women
Worth Watching"
Natasha
Songonuga has been named one of Profiles
in Diversity Journal's "Women Worth Watching" for 2015.
Ms. Songonuga was chosen for "Women Worth Watching" on the
basis of her sophisticated bankruptcy and restructuring
practice at Gibbons and her critical role in the firm's robust
Delaware practice.
■ ■ ■ ■ ■
Attorneys Individually Ranked in 2016
Best
Lawyers
The FR&CR Department earned
regional practice rankings for New Jersey in the areas of
Bankruptcy and Creditor Debtor Rights/Insolvency and
Reorganization, as well as Litigation – Bankruptcy. In
addition, the four Gibbons attorneys who were individually
highlighted in the 2016 edition of
Best Lawyers are:
■ ■ ■ ■ ■
Attorneys Individually Ranked in 2015
Chambers
The 2015 edition of the
Chambers USA Guide to America's Leading Lawyers for
Business features the Gibbons FR&CR Department and
six of its attorneys. The six FR&CR Directors and Counsel
listed are:
In the 2015 edition
of Chambers, sources were quoted as saying of the
firm's bankruptcy practice: "A very diligent team that is
focused on doing the right thing for the client," and
"We were pleased with the service and would definitely
call upon them again if the need
arises."
PROFESSIONAL
ACTIVITIES
Upcoming
Events
David N.
Crapo will moderate and speak at
two upcoming panels for the New Jersey Institute of Continuing
Legal Education. "HIPAA: Ignorance Is Not Bliss. What You
Don't Know Can Hurt You – and Your Client!" will be presented
on November 20, 2015 in New Brunswick, NJ and December 18,
2015 in Fairfield, NJ. Mr. Crapo has already participated in
one presentation of this panel discussion, held on September
29, 2015, in Mt. Laurel, NJ. Recent
Events
The Gibbons Women's Initiative
and the New Jersey Chapter of the Turnaround Management
Association Network of Women (TMA NOW) joined together on
August 5, 2015 to host a breakfast and networking program
entitled "An Inside Look at the Restructuring Industry: A
Discussion Among Professional Women" at the Gibbons
headquarters in Newark. Panelists included FR&CR
Director Natasha
Songonuga and the panel was moderated by FR&CR
Chair, Karen A.
Giannelli.
On July 15, 2015, David N.
Crapo gave a presentation on health privacy at an
NJICLE panel entitled "The Right to
Privacy."
PRO BONO
SPOTLIGHT
Laura Saborio
Dunn, an associate in the Gibbons Financial
Restructuring & Creditors' Rights Department, participated
in the Gibbons/AT&T Partners for Women & Justice
Domestic Violence Clinic, which was held at the firm
headquarters in Newark, NJ on September 30, 2015. Through this
new program, Gibbons and AT&T attorneys assist victims of
domestic violence with child support, visitation, and/or
custody matters. The structure of the program is part clinic
and part traditional representation. In addition, Ms. Dunn
participated in the Gibbons Expungement Clinic on September
15, 2015, also held at firm headquarters. The Expungement
Clinic, a partnership with Volunteers Lawyers for Justice,
assists individuals in need of expungements. Ms. Dunn did
initial client intake for a single mother seeking an
expungement to obtain full-time employment.
FIRM
NEWS
The American Lawyer
Ranks Gibbons Among Top Nationwide Firms on 2015 Midlevel
Associates Survey (September 17,
2015)
Gibbons Named a Top Law Firm
for Pro Bono and Diversity on Vault's Annual Survey
(July 30, 2015)
Gibbons Named One of
Working Mother and Flex-Time Lawyers "50 Best Law
Firms For Women" (July 30, 2015)
The American Lawyer
Ranks Gibbons 44th Nationwide in Pro Bono
Survey (July 13, 2015)
Gibbons Earns a Place on
Law360's List of New Jersey's Powerhouse Law
Firms (June 17,
2015) |