chapter 11 – Business Reorganization and Financial Restructuring

In a recent decision, the U.S. Court of Appeals for the Third Circuit, in the case of In re Alecto Healthcare Services LLC, issued a precedential opinion affirming a debtor’s eligibility to proceed under Subchapter V of Chapter 11 and the ability of a debtor to confirm a reorganization plan that settled potential fraudulent transfer claims against the debtor’s insiders. The decision is notable for its treatment of when a debt is “contingent” and “unliquidated” for purposes of the Subchapter V debt limit and the deferential standard governing bankruptcy court approval of insider settlements over creditor objections.

Read the full Alert on the Duane Morris LLP website.

July 16, 2026July 16, 2026 by Duane Morris

Bankruptcy Court Holds That Receivership Order Divests Debtor’s Manager of Authority to File Chapter 11 Petition

By James Billingsley and Geoffrey A. Heaton

When a loan goes into default, one remedy that a secured lender may have is to seek the appointment of a receiver over its collateral. However, if the lender succeeds and a receiver is appointed, the defaulting borrower’s “counterpunch” may be to file for Chapter 11. A borrower’s bankruptcy filing opens the door to potentially significant delay, uncertainty and expense for the secured lender in its efforts to recover on its loan. A recent bankruptcy court decision highlights one potential way to reduce the risk of a bankruptcy proceeding following the appointment of a receiver: through language in the receiver’s appointment order that divests the debtor’s management of authority to act on behalf of the debtor.

Read the full Alert on the Duane Morris LLP website.

March 19, 2025 by Duane Morris

Bankruptcy Case Derailed by Debtor’s Own Corporate Governance Agreement

A recent decision from the U.S. Bankruptcy Court for the Northern District of Illinois in In re 301 W North Avenue, LLC, 666 B.R. 583 (Bankr. N.D. Ill. 2025) highlights the importance of following proper corporate authorization in bankruptcy filings. The bankruptcy court dismissed a Chapter 11 bankruptcy case for “cause” under Section 1112(b) of the Bankruptcy Code on the grounds that the debtor failed to obtain the requisite independent manager’s consent in accordance with the debtor’s own internal, corporate governance agreement.

Read the full Alert on the Duane Morris LLP website.

Tag: chapter 11

Third Circuit Affirms Subchapter V Eligibility and Insider Settlement Approval

Bankruptcy Court Holds That Receivership Order Divests Debtor’s Manager of Authority to File Chapter 11 Petition

Bankruptcy Case Derailed by Debtor’s Own Corporate Governance Agreement