Articles Posted in US Court of Appeals for the First Circuit

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The First Circuit reversed the district court’s order denying Appellant’s motion to intervene in an adversary proceeding arising within the Commonwealth’s debt adjustment case under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), 48 U.S.C. 2161-2177, holding that 11 U.S.C. 1109(b) provides an “unconditional right to intervene” within the meaning of Fed. R. Civ. P. 24(a)(1). Appellant, the Official Committee of Unsecured Creditors (UCC), intervened in an adversary proceeding initiated by Plaintiffs within a larger case brought by the Financial Oversight and Management Board on behalf of the Commonwealth. The Board had commenced quasi-bankruptcy proceedings to restructure the Commonwealth’s debt under a part of PROMESA referred to as Title III. The district court denied the UCC’s motion to intervene with respect both to intervention as of right and to permissive intervention. The First Circuit reversed, holding that section 1109(b) provided the UCC with an unconditional right to intervene in the adversary proceeding. View "Assured Guaranty Corp. v. Official Committee of Unsecured Creditors" on Justia Law

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A creditor appealed a bankruptcy court’s decision to deny a creditor’s motion to appoint a trustee for the bankruptcy estate to replace the debtor in possession of that estate. The Bankruptcy Appellate Panel affirmed the bankruptcy court’s ruling. The First Circuit also affirmed, holding (1) the bankruptcy court did not err in determining that appointment of a trustee was not justified under 11 U.S.C. 1104(a)(1); and (2) the bankruptcy court did not err in finding that the appointment of a trustee would not be in the interests of creditors - the standard for appointment of a trustee under 11 U.S.C. 1104(a)(2). View "United Surety & Indemnity Co. v. Lopez-Munoz" on Justia Law

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Debtors filed voluntary petitions under chapter 11 of the Bankruptcy Code and a motion seeking bankruptcy court approval of an asset purchase agreement (APA), whereby they agreed to seek substantially all of their assets to Buyer. The bankruptcy court approved the APA through a sale order and confirmed Debtors’ proposed plan of reorganization. Appellants, senior executives of Debtor, were then informed that their employment was terminated the day the sale closed. The bankruptcy court found Buyer liable to Appellants under the APA for their severance pay. The district court vacated the judgment against Buyer, finding that Appellants’ claims against Buyer fell outside the bankruptcy court’s statutorily granted jurisdiction. The First Circuit affirmed, holding that the bankruptcy court had no jurisdiction over Appellants’ claims for severance pay from Buyer because the claims were not proceedings which “arise in” the chapter 11 bankruptcy such that they fell within the grant of jurisdiction contained in 28 U.S.C. 1334. View "Quincy Medical Center v. Gupta" on Justia Law