In a recent Law360 article, Thompson Coburn partner Mark Indelicato discussed the implications of a Delaware bankruptcy judge’s four-part test for determining when bankruptcy courts retain jurisdiction over post-confirmation claims, and how the decision is prompting attorneys to rethink the way Chapter 11 plans are structured.
“Judges now are beginning to focus on this,” especially as debtors try to move through bankruptcy court more quickly, he said.
Mark explained that the issue historically received less attention because Chapter 11 cases often took longer to unfold, allowing creditors’ committees and other parties more time to identify and evaluate potential claims before a plan was confirmed.
“You knew what all the causes of action are,” he noted.
Looking ahead, Mark said the ruling is likely to affect how bankruptcy attorneys draft restructuring plans, particularly when identifying claims that may be retained and pursued after confirmation.
“It’s certainly going to change the way people structure the plans, the postconfirmation trusts, and the retention of jurisdiction,” he said. “I think people are going to be a lot more precise in the causes of action that they identify. … It really is going to take a finer pen just to make sure we’ve done it the right way.”
At the same time, Mark noted that the decision offers valuable guidance by establishing a clearer path for parties seeking to preserve bankruptcy court jurisdiction over post-confirmation claims.
“He’s dispelled some of the folklore in bankruptcy that if it’s going to be used to make a distribution to creditors, that’s ‘related to,'” Mark said of Judge Goldblatt and his decision. “He drafted the roadmap for us so that we can follow his roadmap to really make sure that to the extent these claims should be brought in the bankruptcy court, they can.”
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