Recent Divergent Views on Third-Party Injunctions in Mass Tort Bankruptcies

A third-party injunction in a chapter 11 bankruptcy is generally used to protect a non-bankrupt entity from liability that is shared with, or derivative of, a bankrupt entity.  Third-party injunctions are difficult to obtain in any bankruptcy setting, because bankruptcy laws are generally intended to protect debtors in bankruptcy, not non-debtor affiliates. Increasingly, however, third-party […]

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New Mexico Court Reminds that Prosecuting Prepetition Claims in Bankruptcy May Still Violate the Automatic Stay

There is more than one way that a creditor of a bankrupt entity (or debtor) can directly prosecute its claims in bankruptcy.  If the creditor is involved in prepetition litigation with the debtor, it could request relief from the automatic stay to continue liquidating its claim against the debtor in a non-bankruptcy forum, pursuant to […]

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Mississippi Court Joins Majority of Courts Finding that Setoff Rights Survive Plan Confirmation

Setoff is a right that allows a creditor to offset a prepetition debt owed to a debtor with its prepetition claim against the debtor.  See In re Luongo, 259 F.3d 323, 334 (5th Cir. 2001).  This remedy is aimed at preventing the inequitable and inefficient result that occurs when a creditor is forced to pay […]

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California Court Grants Relief from Stay to Allow Foreclosure of Marina

The Bankruptcy Court for the Northern District of California recently granted a secured lender’s request for relief from the automatic stay, pursuant to sections 362(d)(1) and (d)(2) of the Bankruptcy Code, to allow a trustee’s sale of the debtor’s marina under state law. In re Delta Waterways, LLC, Case No. 18-42076-CN (Bankr. N.D. Cal. December […]

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Fifth Circuit Upholds Regulatory Powers Exception to the Automatic Stay

Citation:  Halo Wireless, Inc. v. Alenco Communications Inc. (In re Halo Wireless, Inc.), Case No. 12-40122 (5th Cir. June 18, 2012) Facts: Halo Wireless, Inc. was a small telecommunications company that provides wireless phone and data service to its customers pursuant to a license from the Federal Communications Commission (“FCC”). Starting in May 2011, private telephone […]

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