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In the complex landscape of bankruptcy proceedings, the motion to sell assets under Section 363 of the Bankruptcy Code marks a pivotal moment that demands attention from creditors and other stakeholders. This legal mechanism allows a debtor to offload assets, potentially offering a fresh start under new ownership while aiming to maximize returns for creditors. Contrary to what some creditors might believe, their active involvement in this process is crucial. It’s not just about observing from the sidelines; stakeholders have a vested interest in ensuring the process unfolds in a way that protects their rights and maximizes their potential recovery.

Under Section 341 of Title 11 of the U.S. Code, the U.S. Trustee convenes a meeting of a debtor’s creditors, known as the 341 Meeting. This meeting serves to examine the debtor’s financial position and verify the facts stated in the bankruptcy filing. While not mandatory, creditors can use this opportunity to ask questions about the debtor’s financials and the bankruptcy case, providing them with insights into potential claim treatments and the debtor’s bankruptcy plan.

In the competitive world of commerce, sellers of goods can enhance their prospects for payment by leveraging a Purchase Money Security Interest (PMSI). This legal claim, when properly perfected, can provide a seller with priority over other creditors, even if those creditors have perfected a lien on the same type of collateral first.

In 2023, the digital asset industry demonstrated remarkable resilience amidst significant challenges, including the dissolution of several digital asset financial services companies, numerous bank failures, and a $4.7 billion fine imposed on Binance by the U.S. government. Despite these adversities, the digital asset market rebounded, recapturing over 50% of the market capitalization lost in 2022, bringing the total to $2.59 trillion.

In Chapter 11 bankruptcy cases, two critical documents are the disclosure statement and the plan. These documents represent the culmination of a case and provide a roadmap for the debtor’s path forward. A Chapter 11 plan can be a plan of reorganization, where the debtor emerges from bankruptcy as a reorganized entity, or a plan of liquidation, where the debtor’s remaining assets are liquidated and the proceeds are distributed to creditors. The plan outlines how creditor claims will be paid and, in the case of reorganization, provides that a debtor is fully discharged from its prior debts.

Bankruptcy proceedings often involve preferences, a complex issue that can be mitigated or eliminated through several affirmative defenses provided by the Bankruptcy Code. This article focuses on one such defense: the contemporaneous exchange defense, codified in 11 U.S.C. § 547(c)(1). This defense encourages creditors to continue business with companies potentially facing bankruptcy and protects transfers intended as a contemporaneous exchange for new value given to the debtor.

In a recent speech at Vanderbilt University, Acting Comptroller of the Currency Michael Hsu discussed his views on the potential risk of financial instability due to the merging boundaries between banking and commerce. In his speech, Comptroller Hsu underscored the importance of vigilance, especially in the realms of payments and private credit/equity, where he predicts the risk of this ‘blurring’ is most imminent. The Comptroller also advocated for the analytic framework recently adopted by the Financial Stability Oversight Council (FSOC) as having the greatest potential to identify and address emerging financial stability risks.