United States: Insolvency/Bankruptcy/Re-Structuring

The Third Circuit Court of Appeals has issued a pivotal ruling in Chester, Pennsylvania's chapter 9 bankruptcy case that examines when municipal revenue bonds maintain their secured status after a city files for bankruptcy protection. The decision analyzes three critical exceptions under Section 552(a) of the Bankruptcy Code that could preserve bondholders' liens on post-bankruptcy revenues, with implications for how municipal financing structures must be crafted to withstand bankruptcy proceedings.

The Eleventh Circuit's decision in In re Aegis Asset Management, LLC establishes a critical timing requirement for secured creditors in bankruptcy proceedings. When Cloud 9 Properties filed three secured claims against property sale proceeds, the court faced a fundamental question: must a creditor own the underlying notes and mortgages at the moment they file their proof of claim, or can they acquire these instruments afterward and still maintain a valid claim?

The Ninth Circuit Bankruptcy Appellate Panel (BAP or Panel) addressed an issue of first impression and held that California state laws that automatically stripped a general partner of its management...