FINANCIAL RESTRUCTURING &
CREDITORS' RIGHTS NEWS

The Business Advisor - Summer 2017

Karen A. Giannelli

(973) 596-4505
kgiannelli@gibbonslaw.com

 

Message from the Chair:

Dear Colleagues and Friends:

Welcome to our Summer 2017 edition of The Business Advisor. In this edition, we preview the October 2017 term of the United States Supreme Court relevant for bankruptcy practitioners. We also discuss a recent precedential decision of the United States Court of Appeals for the Third Circuit clarifying the meaning of the phrase “received by the debtor” for sellers of goods seeking payment of administrative expense claims. Finally, we provide an update on the remand proceedings in Millennium Lab Holdings, where the Bankruptcy Court’s authority to approve non-consensual third party releases under a chapter 11 plan is at issue. These are just a few of the updates relevant to our practice, which continues to provide us with interesting challenges and opportunities to work with our firm’s diverse practice groups to provide our clients with the business advice they need.

I hope you also enjoy reading about our attorneys’ recent and upcoming professional activities where we enjoy the camaraderie of our colleagues and readers. As the summer is nearing its end, we look forward to the busy fall calendar of events and to reconnecting with many of you. As always, we wish you continued health, happiness, and success in your future business endeavors.

Karen A. Giannelli, Esq.
Chair, FR&CR Department


ARTICLES & CLIENT ALERTS

A Preview of the October 2017 United States Supreme Court Term with Respect to Bankruptcy Law
By: Howard A. Cohen

The Supreme Court recently concluded its 2016-2017 term, which featured two bankruptcy cases. In Czyzewki v. Jevic Holding Corporation, the Supreme Court reversed the United States Court of Appeals for the Third Circuit and held that a bankruptcy court, without the consent of the affected parties, cannot approve structured dismissals that deviate from the basic priority rules. (See “The Supreme Court Rejects Use of Non-Consensual Structured Dismissals that Violate the Code's Priority Rules in Jevic”). In Midland Funding v. Johnson, in a decision that surprised many, the Supreme Court resolved a split that existed in the circuit courts and held that a debt collector who files a proof of claim that is time barred by the applicable statute of limitations has not engaged in false, deceptive, misleading, unconscionable, or unfair conduct under the Federal Debt Collection Practices Act. To date, the Supreme Court has added two cases to its docket for the upcoming October 2017 term.

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Sellers Must Show “Physical Possession” by a Debtor to Qualify for a 20-Day Administrative Expense Claims Under Bankruptcy Code Section 503(b)(9)
By:
Mark B. Conlan

A seller of goods may recover as a priority administrative expense the value of goods received by a debtor within 20 days before the filing of a chapter 11 case. Administrative expense claims receive priority treatment over unsecured claims in bankruptcy and must be paid in full, in cash on the effective date of any confirmed chapter 11 plan. Therefore, 503(b)(9) claims (for the value of goods received by the debtor within 20 days before the filing of a chapter 11 case) are valuable claims for creditors—and burdensome claims for debtors hoping to confirm a plan. Three recent court decisions make clear that the “received by the debtor” language in section 503(b)(9) means that the debtor must actually take physical possession of the goods.

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UPDATE on Millennium Lab Holdings: Non-Consensual Third Party Releases and the Bankruptcy Court’s Constitutional Adjudicatory Authority in Light of Stern v. Marshall
By:
Natasha Songonuga

As noted in our last publication, on March 20, 2017, Chief Judge Leonard P. Stark of the U.S. District Court for the District of Delaware (“the District Court”) issued an opinion remanding for further proceedings a 2015 order of the Delaware Bankruptcy Court (“the Bankruptcy Court”) confirming, over the objection of certain opt-out lenders, the joint chapter 11 plan of reorganization of the debtors in In re Millennium Lab Holdings II, LLC, which contained a non-debtor third party release provision granting a full release of any and all claims, including direct claims held by creditors to the equity owners and the officers and directors of the debtors (“the Releases”).


DEPARTMENT HONORS & AWARDS

Karen A. Giannelli, Chair of the FR&CR Department, was recently named a Fellow of the American Bar Foundation, the nonprofit research foundation of the American Bar Association. The Fellows is an honorary organization that supports the mission of the Foundation, comprising attorneys, jurists, and legal scholars and academics who have demonstrated throughout their careers exemplary commitment to their communities and to the highest standards of the legal profession. Members are nominated by peers who are already Fellows, and only one percent of lawyers licensed to practice in each jurisdiction are elected to membership.

Six Gibbons FR&CR Attorneys Individually Ranked in 2017 Chambers

The 2017 edition of the Chambers USA Guide to Americas Leading Lawyers for Business features the Gibbons FR&CR Department and six of its Directors and Counsel:

Sources were quoted as saying of the firm’s bankruptcy practice: “Gibbons has given us very practical advice and we’ve had good results with them.”



PROFESSIONAL ACTIVITIES


Upcoming Events

Natasha Songonuga will be moderating a panel discussion on October 10, 2017 entitled “Cyber-attack: Zombies, Data and Hospitals. What Do You Do in a Hospital Bankruptcy?” at the upcoming 91st Annual Meeting of the National Conference of Bankruptcy Judges (NCBJ) in Las Vegas, Nevada. The program will be sponsored by the American Bar Association (ABA) Business Bankruptcy Committee, in conjunction with ABA Heath Care and Non-Profit Subcommittee Meeting and the NCBJ. The panel will discuss the risk that protected patient data, credit card information, or financial records may be improperly disclosed or that critical medical devices may be hacked during a bankruptcy and explore how to prevent or deal with such breaches. The panel will also address the pros and cons for transferring data and assets, when healthcare, cybersecurity, and bankruptcy are involved.

Karen A. Giannelli, Chair of the FR&CR Department, serves as a member of the Advisory Board for Bankruptcy 2017: Views from the Bench featuring 15 bankruptcy judges, co-sponsored by the American Bankruptcy Institute and Georgetown Law Continuing Legal Education Division and taking place at Georgetown University Law Center in Washington, DC on October 17, 2017. For more information and program highlights, click here.

David N. Crapo, Counsel in the FR&CR Department, is authoring a white paper on the Cybersecurity Information Sharing Act for the Health Information & Management Systems Society. The article will be published later this year.

Brett S. Theisen, an associate in the FR&CR Department, has been asked to serve as the designee for Hon. Edwin H. Stern (ret.) on a subcommittee to the New Jersey Courts Civil Practice Committee, to study the state practice following federal remands.

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Recent Events

On June 29, 2017, David N. Crapo, Counsel in the FR&CR Department, was appointed Patient Care Ombudsman (PCO) in the bankruptcy case of In re Gabriele Jasper, M.D., P.A., which is pending before the United States Bankruptcy Court for the District of New Jersey. The debtor operates a pain management practice.

FIRM NEWS

Gibbons Selected as One of New York’s Best Workplaces
(July 18, 2017) 


Gibbons Earns Nationwide Great Workplace Certification for Second Consecutive Year (July 12, 2017)

Gibbons Featured in the 2017 Chambers Associate Guide
(June 21, 2017)


Gibbons Recognized as a Leading Firm by Chambers USA
(May 26, 2017) 


Gibbons Named One of the NJBIZ Best Places to Work in New Jersey for the Twelfth Consecutive Year (April 27, 2017)

 Gibbons is headquartered at One Gateway Center, Newark, NJ 07102; (973) 596-4500

This communication provides general information and is not intended to provide legal advice.
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