Chapter 11 bankruptcy courts never cease to amaze. Until the debtor is out of chapter 11, they claim immense power. Thus, this post from the Weil bankruptcy blog describes a case in which the court decided to order the terms for a contract so that the debtor could exit bankruptcy. On the flip side, once the debtor is off and running, the bankruptcy courts often are modest in their assertions of power. For example, they let asbestos bankruptcy trusts run wild and do more or le

By itself, the 2009 GM bankruptcy was a poster child for some of the many flaws in chapter 11 and bankruptcy law as used to handle contingent liability claims. See, for example, here, here, here, and here. That said, Bankruptcy Judge Gerber sometimes did draw a due process lines in terms of cutting off claims without notice and a hearing. See here, here (Wilmer Hale article), here (brief of Public Citizen and others). On later appeal, Judge Kaplan, however, tossed out due pro

A Roman Catholic Diocese of Helena, Mont. is now the 11th archdiocese to file for chapter 11 to resolve sex abuses cases. According to a WSJ article, the US Catholic Conference of Bishops now pegs total sex abuse losses at over $2.2 billion. #Bankruptcy

A new post at Weil’s Bankruptcy Blog includes commentary from Canadian lawyers on bankruptcy law flexibility when confronted with a mass disaster. In short, the recent mass rail disaster in Quebec produced an unexpected set of issues when the rail line sought bankruptcy protection. But under a quirk of old statutory law, railroads were excluded from the bankruptcy regime. Nonetheless, a Quebec judge took jurisdiction under the bankruptcy law, asserting power under equitable p

The D&O Diary includes a new post that provides a useful overview of the use and abuse of D&O in bankruptcy. #Bankruptcy

D & O Diary includes a useful new summary post on the use and/or abuse of D&O insurance in bankruptcy. #Bankruptcy

For both substance and style (breezy and brief, with some dry wit), it’s hard to beat Weil Gotshal’s Bankruptcy Blog. And, now, a new post at the blog brings a "Stern" update through a 7th Circuit case especially relevant to mass tort lawyers who find their clients more frequently intersecting with bankruptcy courts. As a reminder, Stern is notable for reminding – and holding again – that bankruptcy courts are courts of limited jurisdiction. Therefore, the bankruptcy courts

Asbestos defendants continue to convince state legislatures to create some long overdue intersections between personal in jury claims in te the tort system and in the bankruptcy trust claiming system. The most recent outcome is in Oklahoma, where legislators approved this new statute. The governor is expected to sign the bill. The new statute is fairly broad. It applies to all types of personal injury trust funds created from a lawsuit – not just asbestos trust funds. The st

Bankruptcies are frequently used to resolve mass tort situations. In some instance, a bankruptcy is fairly foreseeable as tort claims grow. Therefore, a pertinent question is whether or when bankruptcy courts will enforce or strike out contract clauses that purport to operate upon the filing of bankruptcy petition or insolvency. A recent case in Canada adresses the topic, and is summarized by Canadian lawyers in a guest post on Weil’s Bankruptcy Blog. The introduction is set

The story is here on the WSJ Law Blog. Mr. Scalia (the younger) knocks down $ 980. per hour. #Bankruptcy

The bankruptcy courts of Delaware and New York dominate major chapter 11 cases, to the great delight of lawyers in those areas. But the work of the courts has been oft-criticized as far too pro-debtor, with the Delaware courts receiving especially blunt criticism. See Professor Lynn LoPucki’s 2005 book: Courting Failure: How Competition for Big Cases is Corrupting the Bankruptcy Courts. It’s a great telling of a depressing story, with large amounts of objective data to pr

As described here and here by DealBook, American Airlines has now joined the parade of airlines taking their second (or third) cleansing bath in the waters of chapter 11. Once upon a time, a chapter 11 filing was considered a stain on the image of a corporation and its executives. But today, with the rise of financial engineering, a chapter 11 filing is just another management tool, used frequently to obtain a "do over" on contracts that prove inconvenient. And, bankru

The MF Global fiasco has left $ 600 million missing, and 38,000 customer accounts being scrutinized as to what happened. Tort and contract claims will follow, and/or are pending, subject to the bankruptcy stay of all litigation. What to do? Once again, as is true for many mass claims, chapter 11 is the primary vehicle being used to cope with the problems. Investigation is happening, findings will be announced, and the guilty will be pilloried in the media, and perhaps even pu

U.S. bankruptcy judges purport to wield vast power, such as issuing purportedly global stays of all litigation pending against a debtor. Some would say that due process is improperly tossed out the door in such proceedings, but others would argue to the contrary. The market place suggests that the broad orders are desired by debtors, as evidenced by this recent article from three lawyers at Holland and Knight. The outcomes of cases in this sort may impact the extent to whic

I’m shocked, just shocked, that a judge could think inside information and lack of disclosure could have tainted a chapter 11 case (sarcasm intended). The opinion is here – a Dealbook summary is below. SEPTEMBER 14, 2011, 9:28 PM Judge Says Hedge Funds May Have Used Inside InformationBy CHARLES DUHIGG and PETER LATTMAN There have long been whispers on Wall Street that hedge funds have hijacked the bankruptcy process, using their influence as debt holders to obtain and trade

Will litigation liabilities overwhelm Countrywide and/or Bank of America and force one or more entities into insolvency? That’s the question posed by Steven Davidoff in a DealBook post which presents various allegations drawn from AIG’s recent lawsuit against the bank. AIG’s complaint details various inter-bank transactions which could be characterized as fraudulent transfers. Wall Street used to watch and bet on share prices as litigation claims took down former manufacture

Earth Day. A day to consider some of the consequences of the BP oil rig fiasco in the larger context of mass torts. One problem arising from mass torts is that the world’s legal systems are doing a lousy job of dealing with the persons and entities suffering loss caused by the tort. Among other problems, the injured parties are rendered involuntary and unsecured creditors of the person or entity causing the tort. In that context, one might also think of Mother Nature, the

Asbestos claimants continue to pursue GM for asbestos-related recoveries. Here is a story from Bloomberg yesterday on a recent hearing that allowed plaintiffs to move forward with some discovery against GM. Plaintiffs predict possible claims for "billions." Defendants remaining in the tort system will watch with interest. After all, if GM does not pay, then the plaintiff’s will demand that other defendants pay GM’s share. #Bankruptcy

A couple of observations on the Lehman bankruyptcy fees now that the case is back in the news as total professional fees approach $ 850 million, and Weil’s fees edge just over $ 200 million. The fees rankle many because lawyers are being paid stunning hourly rates, such as over $ 1,000 for partners, and over $ 500 for young lawyers. Those numbers make no sense when much of it is for work that’s nothing more or less than complex commercial litigation that could be done by man

A new article by Russel Prugh from Marten Law caught my eye because it explained that the federal circuit courts are now embracing a rule that permissive ointervention rules and CERCLA protect the contribution claim rights of allegedly responsible co-defendants. These ruliings stand in contrast to some asbestos bankrutpcy rulings that fail to protect the rights of co-defendants. The article focuses on a recent opinion, United States v. Aerojet General Corp., No. 08-55996, — F