November 23, 2020 Articles

The Future of LBO-Related Bankruptcy Litigation, Part I

A starting point for research: lessons from the Tribune Company, Lyondell, and Merit decisions.

By Andrew Toft

Whereof what’s past is prologue; what to come,
In yours and my discharge.

—William Shakespeare, The Tempest, act II, scene I

The Great Recession produced a lot of work for bankruptcy lawyers. Issues arising out of Great Recession cases filed during and after 2008 are the subject of opinions written as recently as 2019 ago (see, e.g., In re Tribune Co. Fraudulent Conveyance Litig., Nos. 13-3992-cv, 13-3875-cv, 13-4178-cv, 13-4196-cv (2d Cir. 2019)), and litigation continues. As the economic toll from COVID-19 and the impact of government restrictions on businesses, stay-at-home orders and guidelines, and social distancing worsens, issues contested in Great Recession bankruptcies are likely appear again in bankruptcies filed in the coming weeks, months, and perhaps years. If companies that were targets of leveraged buyouts (LBOs) in the recent past are among the filers, cases involving 11 U.S.C. § 546(e) safe harbors, preemption, and standing will again come before the courts when fraudulent conveyance litigation is filed. The cases discussed below are examples of experienced judges looking at similar facts and the same or similar legal issues and reaching entirely different conclusions regarding how the Bankruptcy Code should be interpreted. The cases discuss 11 U.S.C. § 362, 11 U.S.C. § 546, or both, and how those sections of the Bankruptcy Code should be interpreted and applied in fraudulent conveyance litigation arising out of failed LBOs.

Premium Content For:
  • Litigation Section
Join - Now