Section 502(b)(6): A Ceiling, Not a Method for Calculating Actual Damages

Skip DiMass and Diane Kim wrote for The Legal Intelligencer on commercial leases and the damage calculation in the bankruptcy process.

In In re East Penn Children’s Learning Academy, (Bankr. E.D. Pa. Dec. 3, 2020), the U.S. Bankruptcy Court for the Eastern District of Pennsylvania made clear that Section 502(b)(6) of the Bankruptcy Code provides a statutory limitation—rather than a formula for the calculation—of a  landlord’s actual damages in the event of its tenant’s breach.

To read the full article, please visit the Duane Morris LLP website.

In Bankruptcy, Rejection of Prepetition Contracts Is Not Automatic

Skip DiMassa and Malcolm Bates wrote for The Legal Intelligencer on debtors’ contractual obligations.

In In re Brick House Properties, Bk. No. 20-26250, (Bankr. D. Utah June 11, 2021), the U.S. States Bankruptcy Court for the District of Utah denied a debtor’s motion to reject its prepetition contract for the sale of real property under Section 365 of the Bankruptcy Code. The bankruptcy court found that because the debtor was already subject to a state court-specific performance order compelling it to take the ancillary steps necessary to close the sale, the contract was no longer executory and could not be rejected.

To read the full article, please visit the Duane Morris LLP website.

Expedited Pre-Packs: Balancing Cost-Saving with Adequacy of Notice

In HighPoint Resources Corporation, Case No. 21-10565-CSS (Bankr. D. Del. 2021), the U.S. Trustee’s office filed an objection (Dkt. No. 48) to the rapid confirmation of the Debtors’ plan of reorganization, among other things, indicating its concern regarding the recent trend of expedited pre-packaged plans because of their failure to provide interested parties with adequate notice.

Expedited Pre-Packs

In a typical bankruptcy, a debtor files for bankruptcy, notifies its creditors and other interested parties, prepares compressive schedules, proposes a plan of reorganization and solicits votes on such plan with a disclosure statement. This will often take anywhere from 6 to 20 months, and sometimes much longer.

By contrast, as discussed in our prior post entitled “Rocket Confirmations Gain Traction,” an expedited pre-packaged plan (a “Pre-Pack”) occurs when a debtor files its bankruptcy petition having already solicited votes on a confirmable plan, and a court approves the debtor’s plan within the first few weeks and sometimes, as in In re Belk Inc., Case No. 21-3060630 (Bankr. S.D. Tex. 2021), within the first 24 hours of the filing of the debtor’s bankruptcy petition. Continue reading “Expedited Pre-Packs: Balancing Cost-Saving with Adequacy of Notice”

Rocket Confirmations Gain Traction

Early evening on February 23, 2021, Belk Inc. and its affiliates (collectively, “Belk”) filed their Chapter 11 bankruptcy petitions in the Bankruptcy Court for the Southern District of Texas. Less than seventeen hours later, Judge Marvin Isgur confirmed Belk’s pre-packed plan of reorganization. Belk is not the first Chapter 11 bankruptcy case to accomplish plan confirmation within the first twenty-four hours after filing a petition, and it certainly won’t be the last. In 2019, Sungard Availability Services Capital, Inc. and its affiliates filed their Chapter 11 petitions and similarly confirmed their plan the following day. Likewise, FullBeauty Brands Inc., a retailer like Belk, also achieved plan confirmation less than 24-hours after filing its Chapter 11 petition earlier in 2019.
Continue reading “Rocket Confirmations Gain Traction”

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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