An ABI Committee Newsletter
|
|
| Vol 24, Num 1 | August, 2026
|
|
|
by Todd Carney, U.S. Bankruptcy Court (N.D. Tex.), Fort Worth
|
|
When a chapter 11 petition is filed, executory contracts become one of the first and most strategic issues a debtor must manage. Section 365 of the Bankruptcy Code lets a debtor assume or reject such contracts, but not right away. During that interim period, the debtor may continue to benefit from the counterparty’s performance, while the counterparty is barred from enforcing or terminating the agreement.
The Code grants the debtor breathing space to assess whether a contract aids the reorganization, yet it leaves counterparties asking the same question: What happens to us while we wait? This article examines how courts balance that tension: how counterparties are compensated for a debtor’s interim use of contractual benefits, how “benefit to the estate” limits recovery, and which categories of executory contracts and leases enjoy special statutory
protection.
The Code’s Framework: Sections 365 and 503(b)
Section 365(a) authorizes a debtor, “subject to the court’s approval,” to assume or reject any executory contract or unexpired lease of the debtor. Until that decision is made, the debtor generally need not perform, and the counterparty cannot terminate or compel performance because of the filing itself. The automatic stay, Section 362(a), and the “ipso facto” prohibition in § 365(e) prevent termination based solely on insolvency or bankruptcy.
Read Full Article Online →
|
|
|
Todd Carney
U.S. Bankruptcy Court
(N.D. Tex.)
Fort Worth
|
|
|
by Tanya Behnam, Polsinelli LLP, Los Angeles
and Yakov (Jake) Raymond, Polsinelli LLP, Los Angeles
|
|
SDNY Denies Motion to Withdraw Reference in Celsius Preference Litigation
In re Celsius Customer Preference Actions, No. 25-cv-7328 (JGK) (S.D.N.Y. Dec. 9, 2025)
The U.S. District Court for the Southern District of New York denied a motion by 174 former Celsius Network LLC customers to withdraw the reference from the bankruptcy court in coordinated preference litigation arising from Celsius’s chapter 11 case. The litigation administrator commenced approximately 2,400 avoidance actions seeking to recover cryptocurrency withdrawals made during the 90-day period preceding Celsius’s July 2022 bankruptcy
filing. The litigation administrator’s authority to pursue these preference actions derives from Celsius’s confirmed chapter 11 plan, which was supported by the Official Committee of Unsecured Creditors and preserved estate causes of action for the benefit of creditors.
The defendants sought both mandatory and permissive withdrawal under 28 U.S.C. § 157(d), arguing that adjudication of their safe-harbor defenses under Bankruptcy Code § 546(e) and (g) would require substantial interpretation of federal securities and commodities laws. Judge John G. Koeltl rejected the request for mandatory withdrawal, finding that the motion was untimely because the defendants had identified the basis for withdrawal more than a year earlier and delayed seeking withdrawal until after the bankruptcy court issued adverse rulings on several threshold legal issues. The court further observed that
the timing of the motion suggested tactical forum-shopping.
Read Full Article Online →
|
|
|
by John B. Hutton III, Greenberg Traurig, LLP, Miami
and Antonio Pereira, GlassRatner Advisory & Capital Group LLC, Miami and Mexico City
|
|
In restructuring situations, Unsecured Trade Creditor (UTC) committees have traditionally been viewed as largely reactive, tasked with monitoring proceedings, protecting recoveries and ensuring equitable treatment among unsecured creditors. Those responsibilities remain important, but in our experience, they no longer reflect the full role these committees can, and increasingly should, play.
In more complex capital structures, and particularly in operationally sensitive situations, waiting until distress is formally recognized often means arriving too late to influence outcomes in a meaningful way. Other constituencies (e.g., secured lenders) are often engaged in the process earlier, and UTCs should be as well, so that they have meaningful input as decisions are being made.
Earlier Involvement Leads to Better Outcomes
The most
effective creditor groups we see today tend to engage earlier — sometimes informally, before a formal process is underway. That early engagement allows trade creditors to develop a clearer understanding of the business, its dependencies and the drivers of value.
Just as important, it creates an opportunity to influence key decisions that are often made before unsecured creditors have a formal seat at the table. These include liquidity management, vendor prioritization and the evaluation of restructuring alternatives.
By the time a formal process begins, many of these decisions are already baked in. Committees that are involved earlier are far better positioned to shape the outcome rather than react to it.
Read Full Article Online →
|
|
|
©2026 American Bankruptcy Institute
All Rights Reserved
American Bankruptcy Institute
99 Canal Center Plaza
Suite 200
Alexandria, VA 22314
Email Preferences | View Online
|
|
|
|
|
