In business reorganizations under chapter 11, third-party releases are important tools that often facilitate consensual plans of reorganization, greater recovery for creditors, and an expedited resolution of bankruptcy cases, particularly where a debtor faces mass tort claims. However, as the bankruptcy courts’ constitutional authority to grant nonconsensual third-party releases in chapter 11 becomes subject to further attack under Stern v. Marshall, the established utility of using bankruptcy as a means to efficiently manage and resolve mass tort claims is increasingly at risk. This issue was recently examined in In re Millennium Lab Holdings II, LLC.

“Critical vendor” status is a blessing. Without such status, an unsecured creditor may receive little to no recovery in a traditional chapter 11. Thus, critical vendor status instills hope in unsecured creditors, and when courts — particularly the Supreme Court — reference the revered status, members of the legal community listen and take note.

A recent case briefly mentioning critical vendors was Czyzewski v. Jevic Holding Corp., which examined the use of chapter 11 structured dismissals and the Bankruptcy Code’s priority scheme. Justice Breyer, writing for the Court, juxtaposed critical-vendor motions and structured dismissals, highlighting that the former, while still a priority-skipping structure, possessed a “significant offsetting bankruptcy-related justification” (e.g., preserving the debtor as a going concern and promoting the possibility of a confirmable plan).  

ABI has recently undertaken an important strategic-planning initiative to gather first-hand information and feedback directly from insolvency professionals. Yesterday, you should have received an email (check your spam filter if you have not!) from McKinley Advisors, our partner in this research initiative, inviting you to participate in a survey. The data gathered from the survey will help inform the strategic planning process. Individual responses will be kept confidential, so we encourage you to provide your candid feedback. All respondents who complete the survey will receive a prize and have the opportunity to enter a drawing to win an all-expenses-paid trip to ABI's Winter Leadership Conference this December in Scottsdale, Ariz., or an Apple Watch!