Bankruptcy Litigation Committee

ABI Committee News

Fleming: Executory Contract Assignment Not Approved When Proposed Assignee Could Not Comply with a Term Deemed Integral to the Bargained-for Exchange

Section 365(f) of the Bankruptcy Code permits a debtor to assume and assign an executory contract so long as adequate assurance of future performance is provided to the nondebtor party. However, the phrase “adequate assurance of future performance” is not defined in the Bankruptcy Code, and thus courts must interpret its meaning. In 1990, the Third Circuit set forth a material and economically significant standard to differentiate between the terms of a contract where adequate assurance must be provided from those terms that may be modified by a bankruptcy court. In re Joshua Slocum Ltd., 922 F.2d 1081, 1092 (3d Cir. 1990). Although the material and economically significant standard provided some guidance to bankruptcy practitioners, it was unclear whether a contract term must be economically material, or whether materiality alone would suffice to bring a contract term within the protections afforded by §365(f). That issue was recently clarified by the Third Circuit in In re Fleming Cos., 48 Bankr. Ct. Dec. 188 (3d Cir. 2007).

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Practical Pitfalls in Boilerplate Notice Provisions

With bankruptcy filings back on the rise, it’s natural for the more efficiency-minded among us to look for ways in which to speed along the restructuring process. Boilerplate notice provisions in court orders are a common method for accomplishing this task, helping speed cases along to conclusion. If, however, such a provision precedes a fundamental change in a case, such as dismissal, is the boilerplate notice really sufficient? In short, does simply stating that an order provides sufficient notice under 111 U.S.C. §1112(b) make it so? If notice applies to a case management conference scheduling order, does that notice then extend to matters that might arise at a case management conference at some indeterminate time in the future?

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ABI’s 19th Annual Winter Leadership Conference: Committee Agenda

For those attending ABI’s Winter Leadership Conference (Dec. 6-8 in Rancho Mirage, Calif.), the Bankruptcy Litigation Committee will join forces with ABI’s Commercial Fraud Task Force to present a panel discussion on issues related to the appointment of chapter 11 trustees under §1104. Don't miss the panel, “Gotcha! Replacing Management for Fraud and Other Evil Deeds,” on Dec. 7, from 9:30-11:00 a.m., which will discuss the roles and perspectives of the U.S. Trustee’s Office, debtors, creditors and outside consultants/forensic accountants as they relate to the prosecution of motions to appoint a chapter 11 trustee.

Recap of the Southwest Bankruptcy Conference

More than 430 insolvency professionals from 38 states and Canada attended ABI’s 15th Annual Southwest Bankruptcy Conference at the Four Seasons Hotel in Las Vegas. CLE topics addressed a number of timely national issues, such as the restructuring of lenders and loan servicers, hedge fund liquidations, advanced issues in commercial and residential real estate, high-end individual filers, current developments in consumer and commercial case law and the use of liquidating agents, examiners and ombudsmen, among other topics. “Excellent speakers and discussion,” was a typical comment from attendee evaluations. Program chairs were Jeffrey N. Pomerantz (Pachulski, Stang, et al.), Candace C. Carlyon (Shea & Carlyon) and Jeff Nerland (CRG Partners). Judge Gregg W. Zive (D. Nev.) served as the judicial chair.

Networking and social events included an opening reception at the House of Blues, a wine tasting event, golf tournament and a new show by Cirque du Soleil featuring the music of The Beatles. Next year’s event will be held October 30-November 1, again at the Four Seasons in Las Vegas. Further details of this year’s event, including lists of sponsors and speakers, can be found in the ABI Journal.