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17 January 20254 minute read

Impactful rulings and cases shaping bankruptcy law: 2024 restructuring recap

The restructuring landscape in 2024 demonstrated dynamic shifts, with courts across jurisdictions issuing pivotal rulings that helped reshape bankruptcy law. Throughout the year, DLA Piper’s Restructuring group reported on cases that impacted the industry and restructuring practices nationwide. Below is a recap of our coverage of key rulings, major cases, and evolving trends from 2024.

Stay tuned for more insights from our team in 2025. For questions about any of the issues identified below, or about restructuring issues generally, please reach out to the US Co-Chairs of the Restructuring practice, Robert Klyman and Rachel Albanese, or your DLA Piper lawyer.

2024 impactful rulings and cases

Enhanced trustee powers in connection with fraudulent transfers: The Ninth Circuit expanded the authority of bankruptcy trustees. Trustees no longer need to demonstrate harm to creditors when avoiding intentional fraudulent transfers, providing greater leverage in asset recovery.

Ninth Circuit authorizes trustees to avoid intentional fraudulent transfers without need to demonstrate creditor harm

Safe harbor provisions: Both the Second and Seventh Circuits affirmed the Bankruptcy Code’s “safe harbor” provision, preempting state law claims involving securities transactions. These rulings reinforced the uniformity and predictability of bankruptcy outcomes for certain financial transactions.

Second Circuit rules Bankruptcy Code’s “safe harbor” provision preempts state law fraudulent transfer claims

Seventh Circuit rules that the Bankruptcy Code’s “safe harbor” provision shields private securities transactions from fraudulent transfer claims and preempts state law claims

Solvent debtor obligations: Solvent debtors were compelled to pay contract rate interest on allowed claims and make-whole fees.

Third Circuit court orders solvent debtors to pay contract rate interest, make-whole fees to unsecured creditors

Insider releases and lockup provisions: Courts tightened restrictions on insider releases and clarified the permissibility of “lockup provisions” in restructuring plans.

SDNY Bankruptcy Court strikes down insider releases in chapter 11 plan as improper retention-related transfers

Southern District of New York Bankruptcy Court clarifies permissibility of “lockup provisions"

Lease classifications and claims: Two rulings addressed two key real estate lease issues:

Derivative standing in LLC bankruptcy cases: The Delaware Bankruptcy Court’s allowance of derivative standing is likely to empower creditors in future disputes.

Delaware bankruptcy court breaks with sister courts and grants derivative standing to creditors of a Delaware LLC to sue its members and officers

Federal supremacy in bankruptcy law overrides Delaware LLC law: The Texas bankruptcy court overruled provisions of the Delaware LLC Act that provided for the automatic termination of a member’s interest upon the filing of bankruptcy by that member.

Texas court holds Bankruptcy Code overrides Delaware LLC Act

Standards for chapter 11 dismissals: The Delaware District Court clarified good-faith standards for dismissing chapter 11 cases.

Delaware District Court sheds light on standards for dismissal of chapter 11 case based on bad faith

“New value” plans: The Southern District of New York rejected a debtor’s new value plan and clarified guidelines for such plans.

US Bankruptcy Court establishes guidelines for “new value” plans of reorganization in competing plan scenarios

Litigation claimant deadlines: The Third Circuit is set to address whether litigation claimants whose statutes of limitation expire during a bankruptcy case can rely on filed proofs of claim or must file complaints to preserve their causes of action. This pending decision could redefine how litigation claims are handled.

Third Circuit to decide whether litigation claimants in bankruptcy cases can rely on filed proofs of claim or must file complaints to preserve causes of action

Noncompete agreements: Noncompete agreements remain enforceable for now in an increasingly complex environment for companies evaluating how to treat such agreements in a restructuring scenario.

Noncompete agreements survive the FTC and a noncompete provision survives rejection (Published in New York Law Journal).

Common-law alternatives to chapter 15: Some courts have adopted a flexible, common-law approach to cross-border insolvency cases that may or may not include chapter 15.

Is there a common-law alternative to chapter 15? (Published in the American Bankruptcy Institute Journal).

Environmental liabilities in § 363 sales: Because section 363 sales only provide limited protection to the buyer with respect to certain environmental liabilities, buyers are encouraged to protect themselves by closely analyzing potential environmental obligations.

Environmental liabilities and discharge under a § 363 sale (Published in the American Bankruptcy Institute Journal).

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