United States: Business Restructuring Review | November–December 2023 | Vol. 22 No. 6

In This Issue

Health Care Provider Bankruptcy Update: Patient Care Ombudsman Not Necessary in Every Health Care Business Bankruptcy Case

In La Familia Primary Care, P.C., 2023 WL 5310817 (Bankr. D.N.M. Aug. 17, 2023), the U.S. Bankruptcy Court for the District of New Mexico ruled that a small rural medical practice providing primary-care services did not qualify as a "health care business" under the Bankruptcy Code, and that, even if it did meet the statutory definition, the appointment of a "patient care ombudsman" was not necessary to protect the practice's patients. In In re Parkchester Oral and Maxillofacial Surgery Associates PC, 2023 WL 5761923 (Bankr. S.D.N.Y. Sept. 6, 2023), the U.S. Bankruptcy Court for the Southern District of New York similarly concluded that no patient care ombudsman need be appointed for a dentistry and dental surgery facility in the absence of any allegations or evidence of patient care problems. [read more  ...]

Florida Bankruptcy Court Substantively Consolidates Debtor and Non-Debtor Entities

In In re No Rust Rebar, Inc., 2023 WL 4497328 (Bankr. S.D. Fla. July 12, 2023), the U.S. Bankruptcy Court for the Southern District of Florida held that substantive consolidation of the estates of a debtor and several of its non-debtor affiliates was appropriate because, among other things, all of the companies were controlled by an individual who operated the group as a single enterprise; the companies did not recognize corporate formalities; and their assets, liabilities, and affairs were hopelessly intertwined. [read more ...]

Fifth Circuit: Bid Protections for Stalking Horse in Bankruptcy Asset Sale Satisfied Both Business Judgment and Administrative Expense Standards

In Matter of Bouchard Transportation Co., Inc., 74 F.4th 743 (5th Cir. 2023), the U.S. Court of Appeals for the Fifth Circuit affirmed lower court orders approving a $3.3 million breakup fee and more than $885,000 in expense reimbursement to a disappointed "stalking-horse" bidder in an auction of the debtors' assets, finding that the payments satisfied both the business judgment test under section 363(b) of the Bankruptcy Code and the standard for approval of administrative expense claims under section 503(b). [read more ...]

New York Bankruptcy Court: Foreign Representative in Chapter 15 Case Need Not Be Appointed by Foreign Court 

In In re Agro Santino, OOD, 653 B.R. 79 (Bankr. S.D.N.Y. 2023), the U.S. Bankruptcy Court for the Southern District of New York granted a petition for chapter 15 recognition of a Bulgarian bankruptcy proceeding even though the debtor's foreign representative was appointed by the foreign debtor's manager pursuant to a power of attorney ("PoA") rather than an order of the foreign court. According to the U.S. bankruptcy court, because the Bulgarian debtor was the functional equivalent of a chapter 11 debtor-in-possession with the power to appoint foreign representatives, the individual appointed by the debtor in the PoA as its "foreign representative" qualified as such for purposes of chapter 15 eligibility and recognition. [read more ...] 

Cure and Reinstatement of Defaulted Loan Under Chapter 11 Plan Requires Payment of Default-Rate Interest 

In In re Golden Seahorse LLC, 652 B.R. 593 (S.D.N.Y. 2023), the U.S. Bankruptcy Court for the Southern District of New York ruled that, based upon a close examination of sections 365(b)(2)(D), 1123(d), and 1124(2) of the Bankruptcy Code, a debtor was obligated to pay default-rate interest to cure a monetary default under a loan that would be reinstated in a chapter 11 plan. [read more ...]

Eighth Circuit: Avoidance Causes of Action Are Property of the Bankruptcy Estate that Can Be Sold

In Pitman Farms v. ARKK Food Co. LLC (In re Simply Essentials LLC), 78 F.4th 1006 (8th Cir. 2023), the U.S. Court of Appeals for the Eighth Circuit examined the circumstances under which estate avoidance claims can be sold during a bankruptcy case. In affirming an Iowa bankruptcy court's ruling that avoidance causes of action can be sold as property of the estate, the Eighth Circuit rejected the argument that such causes of action cannot constitute estate property because avoidance claims "belong" only to the trustee or a debtor-in-possession. In so ruling, the Eighth Circuit adopted the broad majority view that estate property includes a debtor's "inchoate or contingent" interests. [read more ...]

U.S. Supreme Court Bankruptcy Roundup 

In the most recent Term beginning in October 2023, the U.S. Supreme Court has agreed to hear three cases involving issues of bankruptcy law, including the permissibility of nonconsensual third-party releases in a chapter 11 plan, the remedy for overpayment of U.S. Trustee program fees in chapter 11 cases, and the requirements for standing to object to a chapter 11 plan. [read more ...]

Newsworthy 

Dan T. Moss (Washington and New York) has been nominated for the International Insolvency Institute, a selective nonprofit organization of leading practitioners, academics, judges, and regulators in the international insolvency field, with 400 members from more than 45 countries. Since its inception, the Institute has made significant contributions to the development and improvement of fair and effective insolvency laws and practices around the world. The Institute works collaboratively with many other organizations, sharing ideas and developing best practices and thought leadership. 

Ben Larkin (London) earned a "Hall of Fame" ranking in the 2024 edition of Legal 500 United Kingdom in the area of Finance-Corporate Restructuring and Insolvency. 

Hannah Plumb (London) was ranked in the 2024 edition of Legal 500 United Kingdom as a "Rising Star" in the area of Finance-Corporate Restructuring and Insolvency.

Ben Larkin (London) was recognized in the 2024 edition of Chambers UK: A Client's Guide to the UK Legal Profession in the field of Restructuring and Insolvency

An article written by Corinne Ball (New York) titled "The Calculus of Default, Cure and Reinstatement of a Loan in Chapter 11 Gains Clarity in New York" was published in the October 25, 2023, edition of the New York Law Journal.

An article written by Oliver S. Zeltner (Cleveland) and  Mark G. Douglas (New York) titled "Texas Bankruptcy Court Blesses Serta Chapter 11 Plan Over Objections of Lenders Excluded from Position Enhancement Transaction" was published on September 16, 2023, in Lexis Practical Guidance.

An article written by Dan B. Prieto (Dallas) and  Mark G. Douglas (New York) tilted "Circuit Split Widens on Extent of Abrogation of Sovereign Immunity for Governmental Units in Bankruptcy Avoidance Litigation" was published on September 16, 2023, in Lexis Practical Guidance. 

An article written by Daniel J. Merrett (Atlanta) and  Mark G. Douglas (New York) titled "Court's Broad Interpretation of Definition of Securities Contracts Promotes Expansive Scope of Bankruptcy Code 'Safe Harbor'" was published on September 16, 2023, in Lexis Practical Guidance. 

Lawyer Spotlight: Alexander Ballmann 

Jones Day recently welcomed Alexander Ballmann as a partner in the Business Restructuring & Reorganization Practice in Munich. Alexander brings a broad range of experience advising clients worldwide on business restructuring and reorganizations. He advises distressed enterprises in restructuring situations, insolvency administrators, and debtors on the structuring of insolvency proceedings and distressed M&A transactions; lenders in debtor crises and insolvencies; and financial investors on distressed equity as well as debt investments and nonperforming loan transactions.

Prior to joining Jones Day in 2023, Alexander advised on one of the largest insolvencies in Germany affecting private investors, with more than 57,000 creditors and investments of more than €3.5 billion; and a €2.5 billion global financial restructuring and refinancing deal on behalf of an automotive technology company. 

Among the leading bankruptcy and restructuring lawyers in Germany, Alexander has represented clients across the automotive, technology, health care, life sciences, and other sectors. He has been recognized by Legal 500 in "Germany Restructuring" for his excellence in advising financial creditors and investors, as well as companies in crisis, with a focus on financial restructuring. At Jones Day, Alexander will collaborate with colleagues to resolve complex restructuring issues and problems in jurisdictions around the globe, including out-of-court workouts, chapter 11 cases, and other transactions with financially distressed entities.

"Jones Day's business restructuring practice has worked on some of the most important financial restructuring issues and problems in jurisdictions throughout the world, and I am delighted to join the team," he said. "I was especially attracted to the Firm's culture of collaboration among partners across practices and offices, with a laser focus on client service excellence. I look forward to working alongside my new colleagues in Munich."

Attachments -  Business Restructuring Review | November–December 2023 | Vol. 22 No. 6