United States: Insolvency/Bankruptcy/Re-Structuring

Cannabis companies had long been shut out of the U.S. bankruptcy system because federal courts refused to administer assets derived from or connected to federally prohibited activity.

A federal bankruptcy court in Delaware has made a groundbreaking decision by recognizing a foreign insolvency proceeding for a cannabis company, marking the first time a U.S. federal court has acknowledged such proceedings despite marijuana's continued federal prohibition. This development opens new restructuring pathways for distressed cannabis operators who were previously limited to state-law remedies like receiverships and out-of-court restructuring.

The Southern District of Texas addresses critical questions left open by the Supreme Court's Purdue decision regarding consensual third-party releases in bankruptcy plans. The court establishes when opt-out mechanisms suffice for creditor consent and clarifies the permissible scope of gatekeeping provisions that restrict litigation against non-debtor parties in Chapter 11 reorganizations.

What happens if a personal injury plaintiff files bankruptcy but fails to disclose the personal injury claim in the bankruptcy case? The United States Supreme Court has now resolved a circuit split...

Cannabis companies had long been shut out of the U.S. bankruptcy system because federal courts refused to administer assets derived from or connected to federally prohibited activity.

A federal bankruptcy court in Delaware has made a groundbreaking decision by recognizing a foreign insolvency proceeding for a cannabis company, marking the first time a U.S. federal court has acknowledged such proceedings despite marijuana's continued federal prohibition. This development opens new restructuring pathways for distressed cannabis operators who were previously limited to state-law remedies like receiverships and out-of-court restructuring.