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Vol 13, Num 1 l March 2015

Technology and Intellectual Property

► In This Issue:

In re Allen Highlights Circuit Split Concerning Whether Recovery Is Required for Purpose of Determining What Is Property of the Estate

ABI

Joseph L. Steinfeld, Jr.
ASK LLP
St. Paul, Minn

ABI

Alex Govze
ASK LLP
St. Paul, Minn

Consider the following situation: A debtor owes you $1 million, and you find out that the debtor has transferred its assets to a third party without receiving reasonably equivalent value and is now unable to pay its debt to you. If you are in one of the many states that has adopted the Uniform Fraudulent Transfer Act for avoiding such transfers, the next step may be to file a fraudulent transfer action. But what happens if the debtor files for bankruptcy? As the Third Circuit’s recent decision in In re Allen highlights, whether the automatic stay will preclude you from pursuing the third-party recipient of the fraudulent transfer will likely depend on the jurisdiction in which the debtor filed for bankruptcy.

Section 362 provides, in relevant part, that the filing of a bankruptcy petition operates as a stay of “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.” Thus, if the fraudulent transfer action is deemed property of the estate, the automatic stay may prevent you from pursuing or continuing to pursue the action if already commenced. The Bankruptcy Code defines property of the estate in part under § 541(a)(1) as “all legal or equitable interests of the debtor in property as of the commencement of the case,” and under § 541(a)(3) as “[a]ny interest in property that the trustee recovers under [certain] section[s] … of this title.”
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Is Lung Disease “Individual” Enough? In re Emoral and Why the Answer Is No

ABI

Fouad Kurdi
EY LLP
Atlanta

In In re Emoral, Inc., the Third Circuit held that personal-injury causes of action arising from the alleged wrongful conduct of the debtor corporation, asserted against a third-party non-debtor corporation on a theory of successor liability under state law, were generalized claims constituting property of the bankruptcy estate. The Third Circuit’s decision draws attention to the distinction between specialized and generalized claims and who has control over such claims: the individual creditors or the bankruptcy trustee.
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Delaware Bankruptcy Court Applies “Unforeseeable Business Circumstances Exception” and Holds that Estate Has No WARN Act Liability

ABI

Simon E. Fraser
Cozen O’Connor
Wilmington, Del.

When a business is in financial distress, the breaking point sometimes comes with little or no warning. An event such as a termination of funding, the falling through of a crucial transaction, or the loss of a key customer can be difficult to predict, and may result in a distressed business being forced to cease operations abruptly, without providing its workers with the advance notice required under the Federal WARN Act.

For this reason, debtors who have ceased all, or a significant part, of their operations frequently find themselves the targets of WARN Act claims. In general terms, the WARN Act requires companies with 100 or more employees to provide affected workers with 60 or more days’ advance notice prior to a mass layoff or plant closure.
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Why Come to the ABI Annual Spring Meeting?

In the video above, James Markus ( Markus Williams Young & Zimmermann, LLC; Denver) and James Patrick Shea (Armstrong Teasdale LLP; Las Vegas) make the case for attending this year’s Annual Spring Meeting.

The Unsecured Trade Creditors Committee will be teaming up with the Commercial Fraud Committee at this year’s Annual Spring Meeting to present a session titled “Advanced Defenses to Avoidance Actions: Understanding Them Can Make All The Difference.” Speakers for this panel include Hon. Marci B. McIvor of the U.S. Bankruptcy Court (ED Mich.) in Detroit (Moderator); Edward Weisfelner of Brown Rudnick LLP in New York; Philip D. Anker of WilmerHale in New York; and Peter S. Willett of Bingham McCutchen LLP in Boston.

Join us on April 16 at the Renaissance Washington D.C.!

April 16-19, 2015 American Bankruptcy Institute 33rd Annual Spring Meeting

 

14th Annual Litibation Skills Symposium

66 Canal Center Plaza, Suite 600, Alexandria, VA 22314
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Tel. (703)-739-0800
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