The Year In Bankruptcy: 2021 – Insolvency/Bankruptcy/Re-structuring



One year ago, we wrote that, unlike in 2019, when the large
business bankruptcy landscape was generally shaped by economic,
market, and leverage factors, the COVID-19 pandemic dominated the
narrative in 2020. The pandemic may not have been responsible for
every reversal of corporate fortune in 2020, but it weighed heavily
on the scale, particularly for companies in the energy, retail,
restaurant, entertainment, health care, travel, and hospitality
industries. Mandatory shutdowns beginning in the spring of 2020
wreaked havoc on the bottom lines of thousands of companies
confronting a precipitous drop in demand for their products and
services. Many were able to weather the worst of the storm with
packages of government assistance or by adapting their business
models to meet the unique challenges of the pandemic. Others could
not and either closed their doors or sought bankruptcy protection
to attempt to restructure their balance sheets or sell their

At the end of 2020 and into early 2021, it was widely
anticipated that the unprecedented pressure the pandemic brought to
bear on the U.S. economy would lead to a boom in corporate
bankruptcy filings. That boom never materialized. Instead, business
bankruptcy filings in the United States plummeted in 2021. The
reasons for the decrease (discussed in more detail in “Recent Trends in Corporate Debt and
Reorganizations: Laying the Groundwork for Future Large Chapter 11
Cases or Just More Runway?”) included:

  • Improvement in the U.S. economy in the spring of 2021 that
    coincided with the widespread deployment of vaccines;
  • A 10 percentage point drop in the unemployment rate from the
    height of the pandemic;
  • Fewer restrictions on businesses and their customers;
  • Historically low interest rates, robust capital market access,
    and other readily available financing;
  • The willingness of lenders to forbear and extend maturities on
    loans; and
  • Government assistance during the pandemic.

The drop-off persisted despite the highest inflation rate in 40
years (as of November 2021), a malfunctioning supply chain, and
continuing pandemic uncertainty due to variants Delta and Omicron
as well as vaccine hesitancy.

Business Bankruptcy Filings

According to New Generation Research, Inc.’s, there were 6,691 commercial bankruptcy filings
in 2021, compared to 11,375 in 2020 and 10,056 in 2019. The real
estate sector led the charge in 2021, with more than 1,100 filings.
Other industries with the greatest volume of filings in 2021
included construction and supplies, health care and medical,
banking and finance, restaurant, and transportation.

There were 3,587 commercial chapter 11 filings in 2021, compared
to 6,870 in 2020 and 5,236 in 2019. One hundred fifty-seven debtors
filed petitions for recognition in the United States of foreign
bankruptcy cases under chapter 15 of the Bankruptcy Code in 2021.
Three municipalities filed petitions to adjust their debts under
chapter 9.

Bankruptcy data and research firm Reorg similarly reported that
2021, with a total of 275 chapter 11 filings by companies with at
least $10 million in liabilities, was the slowest since 2012 and
the first in at least six years to record fewer than 300 cases. Of
those 275 chapter 11 filings, companies in the real estate (28%),
consumer discretionary (20%), health care (10%), energy (9%),
industrials (8%), and financials (5%) sectors recorded the largest
number of cases. Filings by companies in all sectors decreased from
2020, except for the utilities sector, which experienced increased
activity in the wake of Winter Storm Uri in Texas.

Public Company Bankruptcies

According to, bankruptcy filings for
“public companies” (defined as companies with publicly
traded stock or debt), after reaching the highest level in more
than a decade in 2020 (with 110 filings), plummeted to 22 in 2021.
At the height of the Great Recession, 138 public companies filed
for bankruptcy in 2008 and 211 in 2009.

The combined asset value of the 22 public companies that filed
for bankruptcy in 2021 was $19.2 billion, compared to $292.7
billion in 2020. By contrast, the 138 public companies that filed
for bankruptcy in 2008 had prepetition assets valued at $1.2
trillion in aggregate.

Companies in the oil and gas sector grabbed the brass ring in
public company bankruptcy filings in 2021, with 23% (five cases) of
the year’s 22 public company bankruptcies. The other sector
with a significant number of public company filings in 2021 was
banking and finance, with four cases (18%). Other industries with
public filings in 2021 included telecom, construction and supplies,
transportation, computers and software, apparel and textiles,
chemicals and allied products, aviation, retail, hotel and gaming,
automotive, restaurant, and mining (each with one case).

The year 2021 added only eight public company names to the
billion-dollar bankruptcy club (measured by value of assets),
compared to 51 in 2020.

The largest public company bankruptcy filing of 2021-oil and gas
exploration and production company Seadrill Limited, with $7.3
billion in assets-did not even make it onto the top-50 list of the
largest public bankruptcies of all time. By asset value, the
remaining public companies among the 10 largest bankruptcy filings
in 2021 were real estate investment trust Washington Prime Group
Inc. ($4.0 billion in assets); internet services and infrastructure
company GTT Communications, Inc. ($2.8 billion in assets); gas
utility company Ferrellgas Partners, L.P. ($1.7 billion in assets);
coffee shop chain Luckin Coffee Inc. ($1.2 billion in assets);
multi-utility company Just Energy Group Inc. ($1.09 billion in
assets); hotel, resort, and cruise line owner Carlson Travel Inc.
($1.0 billion in assets); application software company Riverbed
Technology, Inc. ($1.0 billion in assets); hotel operator Grupo
Posadas S.A.B. de C.V. ($946 million in assets); and oil and gas
exploration company HighPoint Resources Corp. ($826 million in

Eighteen public companies with assets valued at more than $1
billion exited from bankruptcy in 2021, compared to 25 in the
previous year. Continuing a trend begun in 2012, many more of those
companies reorganized than were liquidated or sold. More than half
of the chapter 11 plans confirmed in 2021 by billion-dollar public
companies were in prepackaged or prenegotiated bankruptcy

Notable exits from bankruptcy in 2021 included:

  • The Commonwealth of Puerto Rico, which largely wrapped up its
    four-year restructuring when the island territory’s legislature
    voted on November 7 to approve a deal that settles $35 billion in
  • Car rental company Hertz Global Holdings Inc., which obtained
    confirmation of a chapter 11 plan in June that paid unsecured
    creditors in full and distributions to stockholders due to the
    company’s rare status as solvent debtor; and
  • Pan-regional Latin American multinational airline company LATAM
    Airlines Group S.A., which exited bankruptcy in December after
    obtaining confirmation of a chapter 11 plan that restructured $7.3
    billion in debt.

Notable Bankruptcy Rulings

Notable bankruptcy and appellate court rulings in 2021 examined,
among other things:

  • The validity of nonconsensual third-party releases in chapter
    11 plans;
  • The doctrine of “equitable mootness” precluding
    appeals of certain bankruptcy court orders;
  • The “solvent debtor exception” requiring solvent
    debtors to pay postpetition interest to unsecured creditors;
  • Whether unsecured noteholders are entitled to a contractual
    “make-whole premium” if a debtor redeems the notes prior
    to maturity during bankruptcy;
  • The automatic stay;
  • Cross-border bankruptcy cases under chapter 15 of the
    Bankruptcy Code;
  • The rejection of executory contracts in bankruptcy;
  • Subordination agreements and chapter 11 plan voting
  • Bankruptcy blocking restrictions in loan and organizational
  • Credit bidding in bankruptcy asset sales; and
  • “Structured dismissals” of chapter 11 cases.

Automatic Stay. In City of Chicago v. Fulton, 141 S. Ct.
585 (2021), the U.S. Supreme Court held that a creditor in
possession of a debtor’s property does not violate the
automatic stay in section 362(a)(3) of the Bankruptcy Code by
retaining the property after the filing of a bankruptcy

Avoidance of Transfers. In In re Trib. Co. Fraudulent Conv.
, 10 F.4th 147 (2d Cir. 2021), reh’g
, No. 19-3049 (2d Cir. Oct. 7, 2021), the U.S. Court of
Appeals for the Second Circuit largely upheld lower court
dismissals of claims asserted by the debtor’s chapter 11
liquidation trustee against various shareholders, officers,
directors, employees, and financial advisors for, among other
things, avoidance and recovery of fraudulent and preferential
transfers, breach of fiduciary duties, and professional
malpractice. In so ruling, the Second Circuit adopted the
“control test” for determining whether the fraudulent
intent of a company’s officers can be imputed to its directors
for the purpose of avoidance litigation.

In In re Bernard L. Madoff Inv. Sec.
, 12 F.4th 171 (2d Cir. 2021), the U.S. Court of
Appeals for the Second Circuit revived litigation filed by the
trustee administering the assets of defunct investment firm Bernard
L. Madoff Inv. Sec. LLC seeking to recover hundreds of millions of
dollars in allegedly fraudulent transfers made to former customers
and certain other defendants as part of the Madoff Ponzi scheme.
The court of appeals vacated a 2019 bankruptcy court ruling
dismissing the trustee’s claims against certain defendants
because he failed to allege that they had not received the
transferred funds in “good faith.” The Second Circuit
also reversed a 2014 district court decision in holding that:

  • “Inquiry notice,” rather than “willful
    blindness,” is the proper standard for pleading a lack of good
    faith in fraudulent transfer actions commenced as part of a
    stockbroker liquidation case under the Securities Investor
    Protection Act (“SIPA”); and
  • A defendant, rather than the SIPA trustee, bears the burden of
    pleading on the issue of good faith. The ruling, which involves
    test cases for approximately 90 dismissed actions, breathed new
    life into avoidance litigation seeking recovery of $3.75 billion
    from global financial institutions, hedge funds, and other
    participants in the global financial markets.

In Holliday, Liquidating Trustee of the BosGen Liq. Trust v.
Credit Suisse Secs. (USA) LLC
, 2021 WL 4150523 (S.D.N.Y. Sept.
13, 2021), appeal filed, No. 21-2543 (2d Cir. Oct. 8,
2021) (discussed elsewhere in this edition), the U.S. District
Court for the Southern District of New York affirmed a bankruptcy
court ruling that:

  • The securities transactions safe harbor in section 546(e) of
    the Bankruptcy Code preempts intentional fraudulent transfer claims
    under state law; and
  • Payments made to the members of limited liability company
    debtors as part of a prebankruptcy recapitalization transaction
    were protected from avoidance under section 546(e) because, for
    that section’s purposes, the debtors were “financial
    institutions,” as customers of banks that acted as their
    depositories and agents in connection with the transaction.

U.S. Trustee Bankruptcy Fees. Several court
rulings in 2020-21 addressed the constitutionality of 2017
legislation that, beginning in 2018, significantly increased fees
levied in chapter 11 cases by the U.S. Trustee Program, which
oversees bankruptcy cases filed in all federal districts except for
those in the two states (Alabama and North Carolina) that are
covered by the Bankruptcy Administrator (“BA”) Program.
That same increase was not imposed in BA districts until nine
months after the January 1, 2018, effective date of the
legislation, and the BA fee increase applied only to cases filed
after that date. The four circuits that had addressed the question
at the end of 2021 were evenly divided. A fifth circuit-the
Eleventh Circuit-broke the deadlock in early 2022 when it ruled
that the fee increase was constitutionally sound. See In re
Mosaic Management Group, Inc.
, 2022 WL 136707 (11th Cir. Jan.
14, 2022).

The Second and Tenth Circuits found violations of the uniformity
requirement of the Bankruptcy Clause of the U.S. Constitution (Art.
I, § 8, cl. 4) because the increase did not apply immediately
to chapter 11 debtors in the two states with BAs rather than U.S.
Trustees. See Clinton Nurseries Inc. v. Harrington (In re
Clinton Nurseries Inc.)
, 998 F.3d 56 (2d Cir. 2021), and
John Q. Hammons Fall 2006 LLC v. U.S. Trustee (In re John Q.
Hammons Fall 2006 LLC)
, 15 F.4th 1011 (10th Cir. 2021). By
contrast, the Fourth and Fifth Circuits found no constitutional
infirmity. See Siegel v. Fitzgerald (In re Circuit City Stores
, 996 F.3d 156 (4th Cir. 2021), and Hobbs v. Buffets
LLC (In re Buffets LLC)
, 979 F.3d 366 (5th Cir. 2020). The
debtor in the Fourth Circuit case filed a petition asking the U.S.
Supreme Court to resolve the circuit split. The Court agreed to
hear the appeal on January 10, 2022. See Siegel v.
, No. 21-441 (U.S. Jan. 10, 2022).

Bankruptcy Filing Restrictions. In In re 3P Hightstown, LLC, 631 B.R.
205 (Bankr. D.N.J. 2021), the U.S. Bankruptcy Court for the
District of New Jersey dismissed a chapter 11 case filed by a
Delaware limited liability company (“LLC”) because the
LLC agreement precluded a bankruptcy filing without the consent of
a holder of preferred membership interests whose capital
contributions had not been repaid. According to the court, the
bankruptcy blocking provision was not void as a matter of public
policy because, under both Delaware law and the express terms of
the LLC agreement, the holder of the preferred membership
interests, which held a noncontrolling position, had no fiduciary

Chapter 11 Plan Provisions. In In re Purdue
Pharma, L.P.
, 2021 WL 5979108 (S.D.N.Y. Dec. 16, 2021),
appeal certified, No. 21 cv 7532 (CM) (S.D.N.Y. Jan. 7,
2022), the U.S. District Court for the Southern District of New
York vacated a bankruptcy court order confirming the chapter 11
plan of pharmaceutical company Purdue Pharma, Inc. and its
affiliate debtors (“Purdue”). The district court ruled
that the bankruptcy court did not have the authority under the
Bankruptcy Code to approve nonconsensual releases granted under the
plan to Purdue’s owners, the Sackler family, from liabilities
associated with Purdue’s sale of OxyContin in exchange for the
Sacklers’ ownership interest in the companies and more than $4
billion to settle OxyContin litigation claims. According to the
district court, “Contrary to the bankruptcy judge’s
conclusion, Sections 105(a) and 1123(a)(5) & (b)(6) [of the
Bankruptcy Code], whether read individually or together, do not
provide a bankruptcy court with such authority; and there is no
such thing as ‘equitable authority’ or ‘residual
authority’ in a bankruptcy court untethered to some specific,
substantive grant of authority in the Bankruptcy Code.”

In In re Nuverra Environmental Solutions,
, 834 Fed. App’x 729 (3d Cir. 2021), cert.
, 142 S. Ct. 337 (2021), the U.S. Court of Appeals for
the Third Circuit handed down a long-awaited ruling that could
have, but ultimately did not, address the validity of
“gifting” chapter 11 plans under which a senior creditor
class gives a portion of its statutorily entitled recovery to one
or more junior classes as a means of achieving consensual
confirmation. By avoiding the merits and holding that an appeal of
an order confirming a “horizontal gifting” plan was
equitably moot, the Third Circuit skirted a question that continues
to linger in the aftermath of the U.S. Supreme Court decision in
Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973 (2017),
which invalidated final distributions to creditors departing from
the Bankruptcy Code’s priority scheme as part of a
nonconsensual “structured dismissal” of a chapter 11

In In re Mullins, 2021 WL 2948685
(Bankr. D. Mass. July 13, 2021), the U.S. Bankruptcy Court for the
District of Massachusetts held that the “solvent debtor
exception” established under the former Bankruptcy Act and
common law, which required a solvent debtor to pay its creditors in
full, survived the enactment of the Bankruptcy Code in 1978.
According to the court, certain provisions of the Bankruptcy
Code-namely, the “absolute priority rule” and the
“best interests test”-“incorporate and implement the
‘solvent debtor exception’ established over the course of
hundreds of years of insolvency jurisprudence.” The court also
held that the appropriate rate of postpetition “pendency”
interest is the federal judgment rate.

In In re The Hertz Corp., 2021 WL 6068390 (Bankr. D.
Del. Dec. 22, 2021), the U.S. Bankruptcy Court for the District of
Delaware similarly ruled that solvent chapter 11 debtors must pay
postpetition interest to unsecured creditors under a chapter 11
plan at the federal judgment rate rather than the higher contract
rate. The court also held that:

  • An indenture trustee plausibly stated a claim that a make-whole
    premium was due to some (but not all) of the debtors’
    noteholders because the debtors voluntarily redeemed the notes
    prematurely during the bankruptcy case;
  • The court was not prepared at that juncture to conclude as a
    legal matter that make-whole premiums can be disallowed as the
    economic equivalent of “unmatured interest” under section
    502(b)(2) of the Bankruptcy Code;
  • Any modification of the noteholders’ claim to a make-whole
    premium was an impairment of the noteholders’ contract claims
    by operation of section 502(b)(2) rather than the debtors’
    chapter 11 plan; and
  • The court was “convinced that the solvent debtor exception
    survived passage of the Bankruptcy Code only to a limited
    extent,” and that in the rare case of a solvent debtor, a
    chapter 11 plan need pay postpetition interest on unsecured claims
    only at the federal judgment rate to render the claims
    “unimpaired” within the meaning of section 1124(1) of the
    Bankruptcy Code.

Creditors’ Rights. In In re Orexigen Therapeutics, Inc.,
990 F.3d 748 (3d Cir. 2021), the U.S. Court of Appeals for the
Third Circuit ruled as a matter of first impression that
“triangular setoff” does not satisfy the Bankruptcy
Code’s “mutuality” requirement. In a typical
triangular setoff, “A” might have a business relationship
with “B” and “C,” where B and C are related
parties. Triangular setoff occurs when A owes B, and A attempts to
set off that amount against amounts C owes to A. The validity of
triangular setoff in the bankruptcy context, as distinguished from
under state contract or common law, is subject to debate.

In In re Fencepost Productions Inc., 629
B.R. 289 (Bankr. D. Kan. 2021), the U.S. Bankruptcy Court for the
District of Kansas addressed the enforceability of a provision in a
prebankruptcy subordination agreement under which a subordinated
creditor assigned to a senior creditor its right to vote on any
chapter 11 plan proposed for the borrower. The bankruptcy court
ruled that such a provision is not enforceable because it conflicts
with the Bankruptcy Code. In a twist, however, the court concluded
that the subordinated creditor lacked “prudential
standing” to participate in the confirmation process because
it was extremely out-of-the-money and therefore had no stake in the
outcome of the case, but rather was attempting to assert the rights
of third parties.

In In re Figueroa Mountain Brewing,
, 2021 WL 2787880 (Bankr. C.D. Cal. July 2, 2021), the U.S.
Bankruptcy Court for the Central District of California denied a
secured lender the right to “credit bid” its disputed
claim in a bankruptcy sale of its collateral based on colorable
allegations that, among other things, its loan agreement and all
payments made by the debtor under it were fraudulent transfers and
the lender had dominated and controlled the debtor in an effort to
take control of its assets.

Cross-Border Bankruptcy Cases. In In re PT Bakrie Telecom TBK, 628 B.R.
859 (Bankr. S.D.N.Y. 2021), the U.S. Bankruptcy Court for the
Southern District of New York entered an order recognizing an
Indonesian “suspension of payments proceeding” under
chapter 15 of the Bankruptcy Code. However, the court refused to
grant a foreign representative’s request for “additional
relief” in the form of enforcement of an Indonesian court
order approving a restructuring plan because the order included
third-party releases (a nonstandard practice under Indonesian law).
According to the court, there was “nothing in the record about
the justification for any third-party release” or any
indication “the foreign court considered the rights of
creditors when considering this third-party release.”

In In re Bankr. Est. of Norske Skogindustrier
, 629 B.R. 717 (Bankr. S.D.N.Y. 2021), the U.S.
Bankruptcy Court for the Southern District of New York held that a
foreign representative in a case under chapter 15 of the Bankruptcy
Code can rely on the Bankruptcy Code’s statute of limitations
tolling provision to extend the deadline under foreign bankruptcy
law to commence avoidance litigation. The decision illustrates the
increasing extent to which chapter 15 has become an invaluable
resource for the representatives of foreign debtors in cross-border
bankruptcy cases.

In In re Condor Flugdienst GMBH, 627
B.R. 366 (Bankr. N.D. Ill. 2021), the U.S. Bankruptcy Court for the
Northern District of Illinois ruled that, if requested relief is
not specifically authorized under chapter 15 of the Bankruptcy
Code, a bankruptcy court still has the discretion to grant such
relief provided it would have been authorized in a cross-border
“ancillary” bankruptcy proceeding under chapter 15’s
repealed predecessor, section 304. In this case, the court held
that it was expressly authorized under section 1521 of the
Bankruptcy Code, as guided by section 1522, to recognize and
enforce a foreign court order confirming a German debtor’s
liquidation plan. The court also permanently enjoined prepetition
litigation commenced by certain creditors because such relief was
necessary to effectuate the liquidation plan.

In Moyal v. Munsterland Gruppe GmbH &
, 2021 WL 1963899 (S.D.N.Y. May 17, 2021), the U.S.
District Court for the Southern District of New York dismissed
litigation against a German company, finding that, under principles
of comity, the lawsuit was stayed by operation of German law when
the company filed for bankruptcy in Germany, even though a U.S.
bankruptcy court had not entered an order recognizing the German
bankruptcy proceeding under chapter 15 of the Bankruptcy Code.

In In re Culligan Ltd., 2021 WL 2787926
(Bankr. S.D.N.Y. July 2, 2021), the U.S. Bankruptcy Court for the
Southern District of New York court granted recognition under
chapter 15 to the liquidation proceeding of a Bermuda company
despite allegations that the company’s court-appointed
liquidators filed the chapter 15 petition solely to enjoin
shareholder litigation pending in a New York state court. According
to the bankruptcy court, although the Bankruptcy Code gives a U.S.
court the discretion to deny any chapter 15 relief that is
“manifestly contrary” to U.S. public policy, “this
exception is not met by a simple finding that the Chapter 15
Petition has been filed as a litigation tactic.”

In In re Talal Qais Abdulmunem al Zawawi, 2021 WL
3890597 (Bankr. M.D. Fla. Aug. 31, 2021) (discussed elsewhere in
this edition), the U.S. Bankruptcy Court for the Middle District of
Florida distanced itself from a 2013 decision by the U.S. Court of
Appeals for the Second Circuit, which 2013 decision concluded that,
like debtors in cases under other chapters of the Bankruptcy Code,
a chapter 15 debtor must reside or have assets or a place of
business in the United States to be eligible for chapter 15 relief.
According to the bankruptcy court, chapter 15 has its own
eligibility requirements, and the eligibility requirements for
debtors in cases under other chapters of the Bankruptcy Code do not
apply in chapter 15 cases.

Executory Contracts. In Caliber North
Dakota, LLC v. Nine Point Energy Holdings, Inc. (In re Nine Point
Energy Holdings, Inc.)
, 2021 WL 3269210 (D. Del. July 30,
2021) (discussed elsewhere in this edition), the U.S. District
Court for the District of Delaware held that the U.S. Supreme
Court’s holding in Mission Product Holdings, Inc. v.
Tempnology, LLC
, 139 S. Ct. 1652 (2019), did not prevent a
chapter 11 debtor from eliminating a midstream services
provider’s exclusive right to provide services to the debtor
under a rejected contract. According to the district court, the
exclusivity provisions’ only value was the leverage it created
for the midstream provider to force the debtor to perform its
rejected executory obligations, which would defeat the purposes of
section 365 of the Bankruptcy Code. The case is an important
clarification on the implications of Mission Product, as
it confirms that creative contracting cannot prevent a debtor from
exercising, and receiving the benefits of, its rejection rights
under the Bankruptcy Code.

Priority of Claims and Interests. In In re KG Winddown, LLC, 628 B.R. 739
(Bankr. S.D.N.Y. 2021), the U.S. Bankruptcy Court for the Southern
District of New York held that the Supreme Court’s 2017 ruling
in Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973
(2017), that the Bankruptcy Code does not allow courts to approve
distributions to creditors in a “structured dismissal” of
a chapter 11 case that violate the Bankruptcy Code’s ordinary
priority rules without the consent of creditors, “left the
door open where such dismissals do not violate the absolute
priority rule and otherwise comply with the applicable provisions
of the Bankruptcy Code.” “Here,” the court wrote,
“the Debtors’ request for structured dismissals fits
neatly through that open door.”

In In re Energy Future Holdings Corp.,
990 F.3d 728 (3d Cir. 2021), the U.S. Court of Appeals for the
Third Circuit ruled that even though a “stalking horse”
bidder failed to obtain necessary regulatory approvals to close an
anticipated bankruptcy asset sale, the bidder could receive an
administrative claim for a break-up fee and expenses if it could
demonstrate that its efforts provided value to the estate.

Issues the U.S. Supreme Court Declined to
The U.S. Supreme Court declined petitions to
review several notable cases addressing bankruptcy issues in 2021.
Those cases involved, among other issues:

  • The doctrine of “equitable mootness,” which precludes
    an appellate court from hearing an appeal of certain bankruptcy
    court orders (principally, but not exclusively, chapter 11 plan
    confirmation orders) (see GLM DFW Inc. v. Windstream Holdings
    , No. 20-1275 (U.S. Oct. 4, 2021); Hargreaves v.
    Nuverra Environmental Solutions Inc.
    , No. 21-17 (U.S. Oct. 12,
  • The “safe harbor” in the Bankruptcy Code shielding
    from avoidance transfers made in connection with certain
    securities, commodity, or forward contracts in the absence of
    actual fraud (see Deutsche Bank Trust Co. Americas v. Robert R.
    McCormick Foundation
    , No. 20-8 (U.S. Apr. 19, 2021)).
  • The Bankruptcy Code’s provisions authorizing the avoidance
    and recovery of fraudulent prebankruptcy transfers as well as the
    defense available to transferees who receive such transfers in good
    faith and for value (see Gettinger v. Picard, No. 20-1382
    (U.S. May 3, 2021)).
  • The Bankruptcy Code’s rules and procedures for modifying
    contractual retiree and health care benefits provided by a chapter
    11 debtor-employer (see Holland v. Westmoreland Coal Co.,
    No. 20-880 (U.S. May 24, 2021)).
  • Whether the doctrine of federal preemption bars a non-debtor
    third party’s tortious interference claims against other
    non-debtor third parties for actions taken in anticipation of a
    debtor’s chapter 11 filing (see Pilevsky v. Sutton 58
    Associates LLC
    , 20-1483 (U.S. Sept. 24, 2021)).

Commercial Bankruptcy Legislative

A handful of measures of business bankruptcy legislation were
enacted in 2021.

On January 12, 2021, former President Trump signed into law the
Bankruptcy Administration Improvement Act of
” (Public Law No. 116-325). The law extended 25
temporary bankruptcy court judgeships for an additional five years
in an effort to ensure the integrity and effectiveness of the
country’s bankruptcy system during a period of increased
filings by large corporations in the wake of the COVID-19 pandemic.
The law also extended a temporary increase in fees owed to the U.S.
Trustee Program for its work in overseeing chapter 11 cases.
Originally set to expire in 2022, the new fee structure was
extended through 2025.

On February 1, 2021, amendments to Part 190 of the bankruptcy regulations of the
Commodity Futures Trading Commission
(“CFTC”) for
commodity brokers became effective. The amendments represented the
first comprehensive update to the CFTC’s bankruptcy rules since
the Part 190 rules were initially adopted in 1983. They modernize
and revise the CFTC’s regulations to reflect changes in the
commodity brokerage industry over that time.

On March 27, 2021, President Biden signed into law the
COVID-19 Bankruptcy Relief Extension
” (Public Law No. 117-5) to extend provisions
providing financially distressed consumers and small businesses
greater access to bankruptcy relief, which provisions were
originally due to sunset on March 27, 2021. The legislation
extended personal and small-business bankruptcy relief provisions
that were part of the Coronavirus Aid, Relief and Economic Security
Act of 2020 through March 27, 2022.

Business bankruptcy legislation that was proposed in 2021, but
never enacted, included:

  • The “PROTECT Asbestos Victims Act
    (S. 574, introduced March 3, 2021), which would
    reform the asbestos bankruptcy trust system by providing oversight
    of asbestos bankruptcy trusts, ensuring those harmed by asbestos
    receive fair and just compensation, and eliminate fraud and abuse
    within the trust system. It would empower the U.S. Trustee Program
    of the Department of Justice to investigate fraud against asbestos
    trusts, make it a crime to knowingly submit a false claim to a
    trust, and require trusts to comply with subpoenas from state
    courts seeking information related to trust payments, to better
    help prevent fraudulent claims in both state and federal
    proceedings. The act would also provide for the appointment of a
    special, disinterested representative to advise future victims in a
    bankruptcy case.
  • The “Bankruptcy Venue Reform Act of
    ” (H.R. 4193, introduced June 28, 2021, and S. 2827, introduced Sept. 23, 2021), which
    would require that chapter 11 bankruptcy cases be filed in the
    district where the principal place of business or principal assets
    of the corporation are located.
  • The “Nondebtor Release Prohibition Act of
    ” (S. 2497 and H.R. 4777, introduced July 28, 2021), which
    would prohibit provisions in chapter 11 plans or bankruptcy court
    orders releasing (or enjoining litigation against) non-debtor
    insiders of bankrupt companies from liabilities. It would also
    empower a bankruptcy court to dismiss a chapter 11 case if the
    debtor was involved in certain restructuring activity that, during
    the 10-year period preceding a bankruptcy filing, was intended or
    had the foreseeable effect of separating a debtor’s assets from
    its liabilities and causing the debtor to assume or retain
  • The “No Bonuses Ahead of Bankruptcy Filing Act of
    ” (H.R. 428, introduced Jan. 21, 2021) and the
    No Bonuses in Bankruptcy Act of 2021
    (H.R. 5554, introduced Oct. 12, 2021), which
    would prohibit debtors from paying “retention, incentive, or
    reward” bonuses to insiders and employees, consultants, or
    contractors making more than $250,000 per year and would allow the
    debtor to recover as preferences any such bonuses paid in the 180
    days prior to filing.
  • The “Stop Wall Street Looting Act of
    ” (H.R. 5648 and S. 3022, introduced Oct. 20, 2021), which
    would make private investment funds bear the debt and employee
    benefit obligations of their acquisitions, put a two-year ban on
    post-acquisition dividends, and require private equity firms to
    disclose their fees and returns. It would also prioritize employee
    pay in bankruptcy, bolster the ability of workers to collect
    severance and pension payments, end private funds’ immunity
    from liability when portfolio companies break the law, and extend
    the Bankruptcy Code’s statute of limitations for litigation to
    claw back funds transferred out of a bankruptcy company from two to
    eight years for transfers connected to a change of corporate
    control. The bill would also give creditors’ committees the
    exclusive right to bring or settle fraudulent transfer actions
    instead of a chapter 11 debtor.

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