Zone of Insolvency

Zone of Insolvency

Tag Archives: Supreme Court

Supreme Court settles trademark Circuit split

Posted in US

On May 20, 2019, the US Supreme Court ruled that a licensor’s rejection of a trademark license in bankruptcy does not terminate the licensee’s right to continue using the licensed mark. Mission Product Holdings Inc. v. Tempnology LLC, 587 US __ (2019). The decision brings trademarks into alignment with how patents and copyrights are already treated under the Bankruptcy Code.

Samuel Kohn, Susan Ross, Bandar Al-Saif and Joy Wang have provided a briefing.… Continue Reading

In a 5-4 decision, SCOTUS levels the retail playing field

Posted in US

Brick and mortar retail businesses have been experiencing financial distress, with retail defaults at an all time high. In 2018 alone, there have been over a dozen retailers filing for bankruptcy protection, several of which, including Toys “R” Us and The Bon-Ton Stores, have been forced to liquidate. However, while many traditional “mall tenants” and other brick and mortar retailers have been struggling, online retailers have been flourishing. The convenience and speed of online retail, coupled with ongoing advances in technology and delivery distribution capabilities, have led to a consistent increase in e-commerce customers. Further fueling the divide between e-commerce … Continue Reading

SCOTUS Determines That 546(e) Safe Harbor Does Not Protect Transfers Where Financial Institution Is A Mere Conduit

Posted in US

In a decision significantly impacting the ability of a plaintiff to prosecute avoidance actions, the United States Supreme Court, in Merit Management Group, LP v. FTI Consulting, Inc., 583 U.S. ___ (2018), unanimously held that a transfer of funds, where a financial institution served as a mere conduit, does not entitle the recipient of the transfer to avail itself of the “safe harbor” defense provided for in section 546(e) of the Bankruptcy Code. Focusing on the construction and plain meaning of the statutory language, the Court’s ruling resolved the current split among circuits interpreting and applying section 546(e).… Continue Reading

SCOTUS Ends Structured Dismissals that Circumvent Priority Rules

Posted in US

TruckPhoto_WEBEarlier today, in Czyzewski v. Jevic Holding Corp., the Supreme Court put an end to “structured dismissals” that allow a debtor to leave bankruptcy while circumventing the Bankruptcy Code’s creditor payment priority scheme.

A Chapter 11 debtor generally has three options for exiting bankruptcy: (1) a confirmed plan of reorganization (or liquidation); (2) conversion to Chapter 7 and liquidation of the debtor’s estate; or (3) dismissal of the bankruptcy case entirely. Chapters 11 and 7 both broadly require the debtor’s estate to make distributions to creditors in accordance with a statutorily mandated order of priorities (although Chapter 11 … Continue Reading

Narrow Means Narrow

Posted in US

SupremeCourt_178740915_100dpiOn May 26, 2015, the Supreme Court of the United States (SCOTUS) decided Wellness International Network, Ltd. v. Sharif—another case addressing issues raised in the wake of the Court’s “narrow” Stern v. Marshall decision. While the case clarified some of the jurisdictional issues raised by litigants post-Stern, many issues remain and each Justice seems more content than the next to decide these issues on the narrowest grounds possible.… Continue Reading

Third Time’s the Charm: Supreme Court May Finally Clarify Bankruptcy Courts’ Power

Posted in US

SupremeCourt_178740915_100dpiOn January 14, 2015, the Supreme Court of the United States heard oral argument in Wellness International Network, Limited v. Sharif, a case that gives SCOTUS the opportunity to finally clarify the constitutional limits of bankruptcy courts’ decision-making power raised by its 2011 decision in Stern v. Marshall. But as we saw with last year’s decision in Executive Benefits Insurance Agency v. Arkison, just because SCOTUS has an opportunity to resolve Stern uncertainty and restore clarity to bankruptcy litigation does not mean that it will do so. It therefore remains an open question whether clarity will be … Continue Reading

Arkison: A Supreme Dodge

Posted in US

SupremeCourt_178740915_100dpiOn June 9, 2014, the Supreme Court handed down a decision in Executive Benefits Insurance Agency v. Arkison—a case that was expected to answer fundamental questions about the constitutional limits of bankruptcy courts.  The case had the potential to either dramatically reshape, or strongly reaffirm existing fraudulent transfer litigation law and practice.  Instead, in a brief opinion written by Justice Thomas on behalf of a unanimous court, SCOTUS affirmed the decision below on narrow statutory grounds, and explicitly declined to address any of the difficult constitutional questions that plague fraudulent transfer litigation.… Continue Reading

Supreme Court Appears Ready to Limit Bankruptcy Court Power in Fraudulent Transfer Actions

Posted in Bankruptcy Courts

SupremeCourt_178740915_100dpiAfter January 14’s oral argument in Executive Benefits Insurance Agency v. Arkison, the big question appears to be not whether the Supreme Court will scale back bankruptcy court power over fraudulent transfer actions, but how drastic the new limitations will be.  Our previous discussions of Arkison appear here and here.

Background

The facts of Arkison are relatively straightforward: Peter Arkison, the chapter 7 trustee for Bellingham Insurance Agency, sued Executive Benefits Insurance Agency (“EBIA”) in the United States Bankruptcy Court for the Western District of Washington for the recovery of a fraudulent transfer.  The bankruptcy court granted summary … Continue Reading

SCOTUS Will Hear Argument on Bankruptcy Court Authority in Fraudulent Transfer Litigation on January 14, 2014

Posted in US

As we discussed in a recent post on Executive Benefits Insurance Agency v. Arkison, the United States Supreme Court is preparing to address the constitutional limits on bankruptcy court authority in fraudulent transfer litigation. In granting certiorari in Arkison, the Supreme Court agreed to consider two questions:

  1. Can a bankruptcy court issue proposed findings of fact and conclusions of law in a “core” bankruptcy matter, such as a fraudulent transfer action under section 548 of the Bankruptcy Code?
  2. Can litigant conduct constitute “consent” to bankruptcy court jurisdiction on matters otherwise required to be decided by Article III courts?
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SCOTUS Takes a Second Look at Issues Raised by Stern v. Marshall

Posted in US

SupremeCourt_178740915_100dpiOn June 24, 2013, the Supreme Court of the United States agreed to hear an appeal that will determine the future of fraudulent transfer litigation before all United States bankruptcy courts. In Executive Benefits Insurance Agency v. Arkison, SCOTUS will determine just how much its prior decision in Stern v. Marshall limits bankruptcy court authority in fraudulent transfer litigation.

Review of Stern v. Marshall: Constitutional Limits on Power of Bankruptcy Courts

In its 2011 decision in Stern v. Marshall, the Supreme Court shook up the bankruptcy litigation world by holding that bankruptcy courts lack constitutional authority to … Continue Reading