Trial Court’s Refusal to Reduce Plaintiffs’ Recovery of Costs by Amounts Attributable to Settled Defendants Affirmed – Lexology

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Court of Appeal of California, First Appellate District, Division Three, December 11, 2020

The heirs of decedent Richard Booker filed suit, alleging that Booker developed fatal mesothelioma from his exposure to defendants asbestos-containing products. The plaintiffs settled with most of the defendants, and a trial was held against the two remaining defendants, Vanderbilt Minerals LLC and Imerys. The jury found the two defendants liable for increasing the decedents risk of mesothelioma and apportioned 60-percent fault to Vanderbilt and 40-percent fault to Imerys.

The plaintiffs filed a memorandum of costs in the amount of $314,549.54, and Imerys responded with a motion to tax. Imerys sought to reduce the filing fees so that Imerys was only responsible for a one-seventh pro-rata share, and to omit all filing and motion fees related to other defendants. Imerys also sought to tax costs for depositions of corporate representative defendants other than Imerys, for depositions of experts designated by defendants other than Imerys, for the deposition of the plaintiffs expert, and for service of process on the other defendants. Citing Heppler v. J.M. Peters Co., 73 Cal.App.4th 1265 (1999), Imerys argued that when a plaintiff incurs costs associated with its case against numerous defendants, costs may be apportioned amongst the defendants for whom they were incurred.

The trial court partially granted the motion in the amount of $44,948.58. However, regarding Imerys request to apportion costs between it and the other defendants, the court found that it lacked discretion to do so, holding that the Code of Civil Procedure, section 1032, subdivision (a)(4) limits discretionary apportionment of costs to cases where a party recovers non-monetary relief. The trial court concluded that even if Heppler is treated as unique authority for the proposition that a California court can apportion a plaintiffs statutory costs between a judgment debtor and other defendants who prevailed at trial (or, by extension, who settled or were dismissed before trial), Heppler was distinguishable because it involved a construction defect action alleging several entirely distinct defects which made it unfair to burden one defendant, against whom the case was evidently simple, with extensive costs incurred to litigate the unrelated issues. Conversely, in the matter at hand, the plaintiffs claims were based on a single injury to which all defendants conduct alleged contributed in the same general way (asbestos exposure). Therefore, the trial court held that Heppler did not apply and declined Imerys request to tax costs related to other defendants. Imerys appealed this decision.

The right to recover costs under California law is governed by statute, and except as provided by statute, a prevailing party is entitled to recover costs in any action or proceeding (internal citations omitted). Pursuant to California statute Section 1033.5, allowable costs are those that are reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation. The determination of whether a cost item was reasonably necessary is a question of fact for the trial court and is reviewed for abuse of discretion. The dispute here centers on whether the trial court had discretion to apportion costs among the original seven defendants named in the case in order to reduce plaintiffs total recovery by the amounts attributable to the defendants other than Imerys,

The court of appeals examined Smock v. State of California, (2006) 138 Cal.App.4th 883, 889, where it rejected a similar request to apportion costs between two co-defendants. Ultimately, the court rejected Imerys argument that the weight of authorities supports its position that trial courts have discretionary authority in all cases to reduce costs against a defendant based on amounts apportionable to other defendants that are no longer in the case. The court found the cases cited by Imerys to be distinguishable, as they all involved situations where some but not all of the parties on the same side of the litigation prevailed against the party seeking costs.

The trial court declined to apportion costs after assuming arguendo that it had discretion to apportion under Section 1032, and the court of appeals found that Imerys failed to demonstrate that the court abused its discretion in doing so, as the courts refusal to tax costs related to other defendants did not exceed the bounds of reason. Ultimately, the court held that the trial court did not abuse its discretion in refusing to reduce plaintiffs recovery of costs by amounts attributable to the other defendants for filing, motions, corporate and expert depositions, and service of process, as such costs were reasonably necessary to the conduct of the litigation and not merely convenient or beneficial.

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Trial Court's Refusal to Reduce Plaintiffs' Recovery of Costs by Amounts Attributable to Settled Defendants Affirmed - Lexology

Nanostructure of the Anodic and Nanomaterials Sol-Gel Based Materials Application: Advances in Surface Engineering – Products Finishing Magazine

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Xavier Albort Ventura*

Laboratory Electrochemical R&D, Barcelona, Spain

University Politecnic of Catalonia, Barcelona, Spain

Tecnocrom Industrial Cabrera de Mar, Barcelona, Spain

Editors Note: A printable pdf of this paper can be accessed and printed HERE.

ABSTRACT

Numerous metals are processed by anodic oxidation. As a result, one can obtain amorphous barrier-type oxides, crystalline barrier-type oxides or amorphous nanoporous oxides. Currently, highly-ordered nanoporous anodic aluminum oxides (AAO) are obtained with various electrolytes to form nanostructures with a range of geometrical features. This material can serve as a template for nanofabrication of variety of nanowires, nanotubes and nanodots. In this way, porous alumina can be fabricated electrochemically through anodic oxidation of aluminum, yielding highly ordered arrays of nano-holes several hundreds down to several tens of nanometers in size.

Sol-gel chemistry offers a flexible approach to obtain a diverse range of materials. It allows differing chemistries to be achieved as well as the ability to produce a wide range of nano-/micro-structures.

In bio-medical applications, sol-gel materials have been found to hold significant potential. One interesting application relates to hybrid materials that utilize sol-gel chemistry to achieve unusual composite properties. Another intriguing feature of sol-gels is the unusual morphologies that are achievable at the micro, and nano-scale. The ability to control pore chemistry at a number of different scales and geometries has proven to be a fruitful area of study, providing excellent bioactivity, and producing cellular responses and enabling the entrapment of biologically active molecules and their controllable release for therapeutic action.

Key words: Nanostructures, porous alumina AAO membranes, nanoporous anodic alumina (NAA), nanofabrication, sol-gel chemistry, nanocarriers, biomolecules.

1. Introduction

Porous alumina films formed by anodic oxidation of aluminum have been extensively studied for use as molds to form nanostructured materials. The technology of porous alumina and its usage as an anodic oxide coating in tools has a long history.

There is a great demand for the use of highly ordered nano-hole arrays, which can be produced on a scale of several tens of nanometers through self-organization, in a diversity of applications. These include high density storage media, functional nanomaterials exhibiting a quantum size effect, highly sensitive chemical sensors, nano-electronic devices and functional bio-chemical membranes.

Porous alumina membranes of anodic aluminum oxide (AAO) are widely used for the fabrication of various nanostructures and nano-devices. Over the last decade, many materials including nanowires, nanotubes and nanodot arrays, have been fabricated by the deposition of various metals, semiconductors, oxides and polymers inside the pores of AAO membranes (Fig. 1).

Figure 1 - SEM micrographs of an alumina nano-hole array formed by two-step anodic oxidation at 40 V using 0.15M oxalic acid: (a) plan-view, (b) cross-sectional view (Shingubara, et al., 1997).

Nanoporous substrates such as porous silicon, nano-porous anodic alumina, titania nanotube arrays and track-etched porous polymer membranes have been commonly employed as substrates for advanced sensing devices. Nanoporous anodic alumina (NAA) processes produce unique structural, chemical, optical, thermal and mechanical properties and biocompatibility in addition to controllable geometry and exploitable surface chemistries.

Ordered AAO stands out due to its remarkable properties such as chemical, thermal stability, hardness and high surface area. Over the past decade, we have witnessed the emergence of various applications based on AAO membranes such as molecular separation, chemical-biological sensing devices, cell adhesion, catalysis, energy storage and drug delivery vehicles (Fig. 2).

Figure 2 - Schematic diagram showing the typical AAO structureand the major applications for this nanostructured material.

Recent advances in fabrication procedures toward structural modifications and the generation of AAO structures with complex pore geometries, including branched, multilayered, modulated and hierarchically complex pores architectures are presented in Section 2.

Silica and doped silica materials obtained via solution gelation, or sol-gel, inorganic polymerization processes are also highly functional materials with an impressive range of applications, and utilize two of the pillars of chemistry: synthesis and analysis. Simple silica microspheres have since seen numerous applications, and today, the benefits provided by solution gelation are well recognized. In addition, advanced processing routes have also been developed that account for the problematic aspects of the gelation process.

Section 3 aims to describe the sol-gel synthesis routes that are most commonly used to produce ceramic and glass networks for biomedical applications. Sol-gel chemistry offers a flexible approach to obtaining a diverse range of materials. It allows different chemistries to be achieved and offers the ability to produce a wide range of nano-/micro-structures. In addition to providing an overview of the polymerization processes, the use of classical inorganic synthesis routes and colloidal aggregation will be discussed along with adaptations to the synthesis procedures that have allowed for further applications. Common links between methodologies are emphasized and the techniques themselves are discussed through recent applications.

Following this is a more detailed description of the biomedical areas where sol-gel materials have been explored and found to hold significant potential. One of the interesting fields that has been developed recently relates to hybrid materials that utilize sol-gel chemistry to achieve unusual composite properties. Another intriguing feature of sol-gels is the unusual morphologies that are achievable at the micro- and nano-scales.

2. Nanofabrication using a porous alumina template

Self-organized porous alumina nano-hole arrays have been used to fabricate a variety of nanomaterials. These methods are categorized as follows: etching of the semiconductor substrate using a porous alumina film as a mask, pattern transfer using porous alumina as a template for deposition of functional materials in the form of porous alumina nano-hole arrays by electroplating and sol-gel, and deposition of functional materials by chemical vapor deposition (CVD).

a. Porous alumina as an etching mask

The transfer of nano-holes to a semiconductor substrate is promising for applications such as photonic band materials, field emitter arrays and quantum dot arrays. Referring back to Fig. 1, a thin porous alumina film was used as a dry etching mask, by placing it in contact with the substrate. The porous alumina film was delaminated from the aluminum plate by a negative voltage pulse or dissolution of aluminum by dipping in HgCl2 solution. After removal of the nano-hole bottom barrier layer by argon plasma etching or ion beam etching, the porous alumina film was placed on the substrate.

Highly directional ion beam etching is necessary for substrate etching, since the alumina nano-hole aspect ratio (the ratio of depth to diameter ) is very high. The alumina mask showed high tolerance to Reactive Ion Beam Etching (RIBE) using a Br2/N2 mixed gas system (Shingubara, J. Nanoparticle Research, 5, 17-30 (2003)). In this method, maintaining the gap between the porous alumina and the substrate at a mnimum is essential for achieving ultrahigh uniformity.

Recently, an alternative method, using a porous alumina film deposited directly on the semiconductor substrate, was proposed by Shingubara (2003). A thin porous alumina film with an aspect ratio below 5 was formed on a Si/SiO2 substrate by the use of sputtered aluminum. Reactive ion etching using chlorine with a high self-bias of RF plasma proved effective for pattern transfer to Si. There was a significant reduction in hole size due to redeposition of nonvolatile materials on the side wall of the nano-holes. For instance, the initial porous alumina hole size of 40 nm was reduced to 10 nm Si holes when a higher aspect ratio of porous alumina nanoholes in the mask was used. The problem with this method was the non-uniformity of the porous alumina mask thickness, which would require a specially designed anodic oxidation electrode to improve the result.

b. CVD deposition on porous alumina

Chemical vapor deposition of materials in porous alumina nano-holes is a challenging topic for CVD research. Since porous alumina can contain extremely high aspect ratio holes, it is of great interest to discover how high aspect ratio holes can be filled by CVD. Working in a supercritical fluid medium is one way to obtain excellent disposition profiles.

Radium films were synthesized at controlled depths within porous alumina disks by the hydrogen reduction of organoradium compounds dissolved in supercritical CO2 at 50C. Guided by a simple mass transport model, radium films ranging from 1 to 60 microns in thickness were deposited at prescribed depths between 60 and 500 microns.

The formation of carbon nanotubes (CNT) in porous alumina by CVD has been intensively studied. It is well known that CNT-CVD needs catalysis for thermal decomposition. A well ordered array, using electrodeposited Co and Nb located beneath the aluminum layer is shown in the SEM micrograph of Fig. 3.

Figure 3 - SEM image of an array of carbon nano-tubes fabricated in a porous alumina template (Li,et al., 1999).

In the example shown in Fig. 3, using cobalt catalysis, pyrolysis of C2H2 was carried out at 600C. Carbon nanotubes with diameters ranging from 10 to several hundred nanometers and lengths of up to 100 microns can be produced. This structure is highly promising for an ultrahigh-density field emitter array. CNT formed through Co catalysis by this method has a multi-walled structure. Low temperature deposition of CNT at around 500C by microwave plasma-assisted CVD has also been reported.

c. Electroplating on porous alumina

Numerous studies have been conducted on the filling of conductive materials in porous alumina nano-holes by electroplating. Prior to electroplating, the bottom barrier layer should be thinned to less than about 15 nm. Wet chemical etching of the anodic alumina film using dilute chromic acid solution (pore widening treatment), or step-wise lowering of the anodic voltage to 15 V have been employed. Alternating current (AC) or pulsed current electroplating has been used since the impedance of the barrier layer at the nano-hole bottom is too large to allow for direct current (DC) electroplating. Research activity on electroplating magnetic materials in porous alumina has intensified remarkably in recent years. As for other metals, nanowire array formation of gold and silver have been reported.

3. Solgel synthesis on porous alumina

Sol-gel provides an alternative synthesis route for nanomaterial fillings in porous alumina nano-holes.

Monodispersed hollow nanocylinders containing crystalline titania particles have been filled by an aqueous solution of titanium tetrafluoride.

Hollow nanotubes comprised of In2O3 and Ga2O3, have been synthesized by sol-gel chemistry and sol-gel synthesis of an array of C-70 single cristal nanowires in a porous alumina template.

a. Organic precursors in sol-gel methods

Silicon alkoxides represent the main network forming agents used in sol-gel preparation methods. While the sol-gel process provides key benefits, such as the low synthesis temperatures and the vast array of alkoxide precursors available, the cost associated with alkoxide precursors presents some limitations.

Nevertheless,the efficiency provided by low temperature synthesis and the accuracy with which specific compositions can be achieved have the potential to outweigh any such negative aspects of the process. Low temperature synthesis is achieved through solution-mediated formation of strong covalent bonds between elements that would otherwise require excessively high temperatures to create. For alkoxides this requires initial hydrolysis of the alkoxy group followed by as condensation between network forming substrates (Fig. 4).

Figure 4 - Initial hydrolysis and condensation stages of tetraethyl orthosilicate - Si(OC2H5)4 (TEOS) in the production of silica oligomers: (a) Introduction of water to TEOS, (b) H2O forms a hypervalent substrate with silicon, (c) transfer of the proton from the water to the adjacent alkoxy group, (d) cleavage of the ester bond and dealcoholation.

Sol-gel methods also enable the powderless processing of glasses, ceramics and thin films or fibers directly from solution. Precursors are mixed at the molecular level and variously shaped materials may be formed at much lower temperatures than is possible by traditional preparation methods.

One of the major advantages of sol-gel processing is the possibility of synthesizing hybrid organic-inorganic materials. Combinations of inorganic and organic networks facilitate the design of new engineering materials with diverse properties for a wide range of applications. Biomedical applications invariably require the design of new biomaterials, and this can be achieved by emerging sol-gel chemistry and biochemistry. The gel-derived materials are excellent model systems for studying and controlling biochemical interactions within constrained matrices with enhanced bioactivity because of their surface chemistry, micro-/nano-pores and large specific surface area. In biomedical applications, the coating of medical devices is an important issue. Materials used in medical devices should have appropriate structural and mechanical properties and ideally promote a healing response without causing adverse immune reactions. Medical services designers currently use various surface treatments such as coatings that enhance or modify properties such as lubricity, the degree of hydrophobicity, functionalisation and biocompatibility. Sol-gel technology offers an alternative technique for producing bioactive surfaces for these applications.

Sol-gel thin film processing offers a number of advantages including low-temperature processing, ease of fabrication, and precise microstructural and chemical control. The sol-gel derived film or layer not only provides a good degree of biocompatibility, but also a high specific surface area and an external surface whose rich chemistry allows ease of functionalization by suitable biomolecules.

The development of multifunctional nanoparticles that can be used as drug delivery vectors remains a significant challenge of material science. These applications require intimate control of the particle size and discrete, superparamagnetic iron oxide nanoparticles that can be prepared by the sol-gel method to lower the annealing temperatures required.

Silica-based magnetic nanocomposites, formed by magnetic nanoparticles (MNP) dispersed in a silica matrix, are of relevant technological and scientific interest. Here encapsulation in silica prevents interactions between the MNPs, and consequently assures a uniform dispersion. The latter is essential for efficient performance in most applications, including the diagnostic and therapeutic areas, where particles must display high magnetization, be stable against oxidation and most importantly, remain nonaggregated.

Engineering new bone tissue with cells and a synthetic extracellular matrix (ECM) represents a promising approach for the regeneration of mineralized tissues. Bone regeneration requires a scaffold material upon which cells can attach proliferate and differentiate into functionally and structurally appropriate tissues for the body location into which they are placed .

Bone is a highly mineralized tissue consisting of an apatitic mineral phase most similar to a form of carbonated hydroxyapatite (HCA), although a significant contribution is made by extraneous ions such as sodium chloride, zinc and, to a lesser extent, fluorides. In general, HCA can be considered a model mineral for natural bone and is widely accepted as a bioactive material with excellent biocompatibility, high osteoconductivity, and reasonable mechanical strength. For these reasons, it has been widely used in tissue engineering applications, especially for bone and cartilage regeneration.

However, in vivo data suggest that degradation or ion release from labile sources such as bioactive glasses promotes new bone formation, as opposed to the relatively lower ion release that occurs as a result of HCA minerals reaching equilibrium with their surrounding medium. It appears that sol-gel methods hold the potential to apply an ever-increasing range of glass-based bioactive coating to materials, which have previously remained incompatible with alternative coating techniques. Furthermore, the versatility of the sol-gel approach is opening new doors to previously unattainable compositions, again increasing the potential applications of sol-gel materials as fillers to replace tissue within necrotic or defect sites.

Sol-gel microencapsulation technology and its broad application potential are now well-known. Relevant here is the use of silica for encapsulation and controlled release of both hydrofilic and hydrophobic molecules, ensuring considerable chemical and physical protection of the valued entrapped dopants. Given the above, it can be seen that sol-gel derived bioactive materials hold great potential value.

b. Sol-gel methods and reactions processes

The sol is a colloidal suspension of solid particles, whereas a gel is an interconnected network of solid-phase particles that form a continuous entity throughout a secondary, usually liquid phase. Throughout sol-gel technology, these phases are conserved though the chemical reactions that take place during the gel evolutions, and can be manipulated in a variety of ways, e.g., altering the initial precursors, time allowed for gelation, catalysts, degree of solvation, gelation conditions or physical processing of the gel itself. Sol-gel processes allow the formation of solid materials through gelation of solutions and can be used to produce a large number of useful morphologies. The processes are illustrated in Fig. 5.

Figure 5 - Sol-gel synthesis routes: Processes are defined as sol-gel by the transition of a colloidal solution to an interconnected gel network (gelation). The further processing stages illustrated are non-redundant and may be combined depending on the specific needs of the application.

What remains constant for the production of sol-gel derived bioactive materials are the stages that allow for hydrolysis and condensation reactions to occur. Successful manipulations of these reactions are shown in Fig. 6.

Figure 6 - Subsequent condensation stages of TEOS in the production of silica oligomers. Condensation between silanol groups on two hydrolyzed TEOS molecules (a and b) and between a silanol group and an adjacent alkoxy group (c and d) result in the production of free H2O and ethanol respectively.

Figure 6 shows that only one reaction occurs during condensation: the loss of an HO-group from the substrate. This mechanism is therefore a reaction that can occur as either dehydration or dealcoholation. For the former to occur, two HO-groups must take part in the formation of an Si-O-Si bond, whereas the latter results from the direct transfer of a proton to the leaving group on a neighboring substrate.

As evident from these reactions, a decrease in pH can promote hydrolysis through protonation of the leaving groups. Alternatively, higher pH will induce the deprotonation of OH- groups and therefore favor condensation. However, OH- is a highly efficient nucleophilic species and electron transfer from -OH groups can be facilitated by H+ in the immediate environment. This relationship means that higher and lower pH values are also able to promote condensation and hydrolysis, respectively. In silica-based systems, the reactions proceed by acidic catalysis at pH < 2.5 and basic catalysis when pH < 2.5 ,which can be explained by the isoelectric point of silica at pH 2.5.

In the sol-gel route synthesis, a stepwise reaction scheme has been undertaken to control the ratio of hydrolysis to condensation rates. In general, the rate of hydrolysis is fast compared to that of condensation in strong acidic conditions. Therefore, a well-ordered hexagonal arrangement of mesopores (a pore structure that is commonly formed in sol-gel silica materials) is formed at low pH in acidic conditions. Meanwhile, in neutral or basic conditions ranging from pH 7 to pH 9, the rate of condensation is faster than that of hydrolysis, and eventually the materials prepared by a single-step reaction at high pH display a gel-like structure often without mesopores. However, the higher electronegativity of transition metal species as compared to silicon and phosphorus can cause issues where condensation reactions proceed with an unfavorable bias away from the desired network composition or the end particulate structure.

Like silicon, phosphorus and vanadium precursors can be used as network-formers within the sol-gel process. This difference in network connectivity results in a more relaxed network structure when compared to silica-based networks, as silicate is able to share all four oxygen atoms with neighboring cationic groups. This in turn increases the range and quantity of species that are able to be included, but such flexibility comes at the expense of stability, as the high electronegativity of the =O bond leaves the network open to hydrolysis. As with conventional melt-derived materials, solubility can be controlled by the combination of network modifiers, as can the release of active agents or tailoring of other physical properties of the material in question.

The solvent itself also plays an important role in determining the rate of gelation reactions. This solvation effect can occur in two ways: through viscosity or hydration effects. However, the solvent is shown to alter the NiO2 crystalline structure, which serves to highlight the need for experimental confirmation as, with such a variety of avenues available to exploit, comes as set of variables that must also be controlled, including the effects of viscosity, or more precisely the dielectric constant.

By altering the solvent species from that of the alkoxide itself, the substrate can become coordinated with a mixture of alkoxy groups. Undoubtedly, this would affect polymerization in a way that is dependent on a specific combination of coordinated groups present on network-forming substrates throughout the solution.

The initial Si-O-Si bridges that are formed can be further strengthened by passive deposition of silica on the initial bridge as a result of the equilibrium orthosilicic acid Si(OH)4, and the silica making up the mass of the colloids. Furthermore, colloidal sol-gel methods are not limited to silica or silica-based systems.

The applicability of the colloidal methods is based on two key aspects of the process stabilization of the colloidal particles within the sol and coalescence or flocculation to form the gel. With particles that possess the same electrostatic charge, colloidal suspensions are maintained by the potential, which in turn reflects the magnitude of the electrical double layer present on charged particles in solution. As noted above, the removal of the solvent is one method by which the aggegation of colloidal particles can be achieved. Alternatively, altering the pH, salinity or temperature can induce depeptization, whereby the electrical double layer is reduced to a point where the potential is no longer strong enough to prevent attractive Van der Waals forces and flocculation takes place.

Despite the potential of colloidal methods to provide much thicker, more structurally resistant films and deposits than methods that rely on de novo synthesis,** this route has seen the least number of applications within biomedical research. The gelation rate correlates well with the structural stability of the encapsulated proteins and serves to demonstrate an ability to circumvent conditions that would otherwise damage sensitive molecules. For certain applications however, the colloidal sol-gel method does not provide the degree of protection required.

Colloidal methods offer a further benefit over alkoxide based systems in that the majority of the network is already present in the sol. Adaptations such as the introduction of osmoprotectants can therefore be applied without significantly interfering with the integrity of inorganic capsule itself.

c. Metal chelation in the sol-gel

In aqueous solution, metal ions are coordinated by a hydration shell, the nature of which depends both on the valence of the specific metal in question and the pH of the solution. This ultimately results in the formation of polymeric oxides in solution.

The hydroxy-ligand thus formed is able to act as a bridge between the two hydrated metal complexes. This results in the release of a proton into the aqueous medium and is followed by a subsequent deprotonation event resulting in a M-O-M covalent bond. From this brief description alone, the influence of pH on the process can also be deduced. An increase in pH favoring olation and the lower pH inhibiting the process.

Undoubtedly, materials composed of metal oxides exhibit a wide range of desirable properties and as a result, a series of methods have been developed based on chelation of metal precursors in order to control the natural polymerization processes. Essentially, metal chelation sol-gel methods employ strong chelating agents (such as citric acid or EDTA) as a means of controlling the formation of the highly reactive hydrated complexes.

Although discussed here in terms of chelated inorganic precursors, chelation itself is not limited to inorganic processes. Such methods can also be applied to modify the polycondensation of metal alkoxides whereby the rate of reaction is reduced following the replacement of alkoxide, leaving groups with a chelating ligand in more stable conformation.

In further discerning metal chelation methods from the alkoxide sol-gel route, the underlying principle is that polycondensation of the metal itself occurs through hydration processes described above, as opposed to the hydrolysis and condensation steps akin to the polymerization of organometallic precursors.

Based on a system that made use of triethanolamine as an Fe(II) chelating agent, triethanolamine is able to form chelation complexes with a wide range of transition metal elements, therefore offering a plausible route for further biologically relevant substitutions within the network.

The use of epoxides as gelation agents provides another useful synthesis pathway. Typically, epoxide routes are most effective when the formal oxidation state of the dopant cation is M+3, although species that possess a lower valence may also be incorporated. In this instance, the epoxide does not act as a precursor per se. Rather, the epoxide group is able to efficiently accept protons, leading to the formation of hydrated oxo-ligands M(H2O)n(O)m-n)+2 coordination until deprotonation in the presence of an epoxide.

Although not strictly a chelation-base methods parallels can be observed between this approach and the more typical chelation methods that aim to prevent natural polymerization processes until required.

d. Polymer assisted sol-gel

In a natural extension from metal chelates methods are the polymeric sol-gel methods. Essentially these methods involved the chelation of reactive inorganic gel-forming agents within an organic polymer network although, depending on the material to be produced, chelation is secondary to stabilization. In broader terms, gel forming agents are maintained within in a state of dispersion throughout the solution, thereby preventing the precipitation of aggregates within the sol. This method does however require subsequent heat treatment to remove the organic polymer following the formation of the inorganic gel.

Chemical properties,such as the biomimetic*** molar ratios of apatites, can also be achieved with polymer assisted stabilization due to the homogeneous elemental distribution of the gel network.

Inorganic networks can also be formed in situ through the polymerization of organic precursors. This method involves the formation of a three-dimensional polyester network resulting from the reaction between ethylene glycol and citric acid. The citric acid acts as a chelation agent due to an available bi-dentate binding mechanism followed by an esterification with ethylene glycol (Fig. 7). The organic network would be removed as with ex situ polymers as described above.

Figure 7 - Esterification (condensation) of ethylene glycol and citrate in the presence of a cationic ligand (calcium).

Effective production of both biocompatible ceramic-mineral composites and apatites with predefined stoichiometry has been achieved, with polymer-assisted sol-gel methods. Such research may also have broader implications than in solving issues associated with biocompatibility as, with the advent of controlled deposition of inorganic mineral layers, a biotic hard tissue regeneration may also be within reach.

e. Silica-based sol-gel materials

Silica-based sol-gel materials have been the subject of intense interest for the last three decades. Biomolecular encapsulation within sol-gel-derived silica matrices was first successfully achieved by entrapping enzymes into TEOS matrices.

During the last few decades, silica-based materials have supplied successful solutions for soft and hard tissue regeneration. These materials are highly biocompatible and the positive biological effects of their reaction products make them an interesting group of materials for tissue regeneration. Silica-based bio-reactive glasses were first synthesized via a sol-gel technique at lower processing temperatures compared to the melt derived glasses. Extensively researched sol-gel glasses were based on the SiO2-ONa-P2O3 system for biomedical apllications. Silica-based sol-gel glasses exhibit many of the properties associated with an ideal material for tissue regeneration, such as high surface area and a porous structure, in terms of overall porosity and pore size, that promote cell-material interactions and cell invasion. Research on these glasses showed that their porous structure exhibits a higher surface area that exhibits higher tissue bonding rates.

A sol-gel process, involving the foaming of a sol with the aid of a surfactant, followed by condensation and gelation reactions, has been used to prepare porous scaffolds of a few bioglasses, such as the glass designated with the composition (mol%): 40 SiO2-2O-ONa-2P2O3. The as-prepared scaffold had an overall microstructure similar to that of dry human trabecular bone, but the pore structure was hierarchical consisting of interconnected macropores <90 microns, resulting from the forming process and mesopores that are inherent to the sol-gel process.

Figure 8 - Plan-view SEM micrographs of porous alumina film surfaces that were formed by AFM nano-indentation, followed by anodic oxidation at 40 V using 0.15M oxalic acid for 5 min. Indentation force was 4.16105 N. The indentation interval was varied from 55 to 110 nm. (Shingubara, et al., 2002).

Figure 8 illustrates the porous structure of the scaffolds made of bio-active glasses produced by means of the sol-gel processes. This hierarchical pore structure of the scaffolds is beneficial for stimulating interaction with cells as it mimics the hierarchical structure of many natural tissues and more closely simulates the physiological environment of mineralized tissues. Thanks to the nanopores in the glass, sol-gel derived scaffolds have a very high surface area (100-150 m2/g). As a result, these scaffolds degrade and convert faster to via a hard anodizing process than those of melt-derived glass with the same composition. However, these sol-gel-derived scaffolds have a relatively low compressive strength, and consequently, they are primarily suitable for applications focused on low load bearing orthopedic sites.

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Nanostructure of the Anodic and Nanomaterials Sol-Gel Based Materials Application: Advances in Surface Engineering - Products Finishing Magazine

Evelyn Hu delivers 2020 Dresselhaus Lecture on leveraging defects at the nanoscale – MIT News

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Harvard University Professor Evelyn Hu opened the 2020 Mildred S. Dresselhaus Lecture with a question: In an imperfect world, is perfection a necessary precursor for transformative advances in science and engineering?

Over the course of the next hour, for a virtual audience of nearly 300, the Tarr-Coyne Professor of Applied Physics and Electrical Engineering at the John A. Paulson School of Engineering and Applied Sciences at Harvard University argued that, at the nanoscale, there must be more creative ways to approach materials. By looking at what nature gives us in terms of electron energy levels, phonons, and a variety of processes, Hu said, scientists can re-engineer the properties of materials.

To illustrate her point, Hu described the effect of defects vacancies or missing atoms in otherwise perfect crystalline semiconductors. In transforming these defects, Hu demonstrated how unique properties at the nanoscale involving quantum confinement can profoundly change electron density of states. Hus talk exemplified the exceptional scholarship and leadership that have defined her career, says Vladimir Bulovi, the founding faculty director of MIT.nano.

Professor Hu has developed groundbreaking techniques for designing at the nanoscale, used those techniques to produce extraordinary innovations, and extended her impact through inspirational mentorship and teaching, says Bulovi, who is also the Fariborz Maseeh Professor of Emerging Technologies. We were honored to have her present this years Dresselhaus Lecture."

Hu attended the same high school as Dresselhaus Hunter College High School in New York City a coincidence that was like a good luck talisman to me, she said. It gives me such great pleasure to try and express my gratefulness to Millie for all the guidance and mentorship shes given to me from the time I was a graduate student and the inspiration that she's given to us all.

2020 Mildred S. Dresselhaus Lecture: Evelyn Hu, Harvard University

Making a perfect material less perfect

Inspired by Dresselhauss work in the early 1990s to rethink thermoelectric materials, Hus research group is working on new ways to engineer materials that can exhibit a combination of photon correlation and spin coherence. Her talk showcased how silicon vacancies in silicon carbide, when integrated within nanoscale optical cavities, can result in a controlled output of light. The integrated defect-cavity system can also serve as a nanoscope into the material, allowing scientists to learn about the interactions with surrounding defects, providing broader insights into long-term quantum coherence.

Hu displayed an image of a perfect, single crystal semiconductor, then quickly disrupted that perfection by removing the silicon atoms to create a silicon vacancy. Changing the material in this way allows her to look for opportunities, she said. Think of vacancies not as something missing, Hu explained, but as atom-like entities with particular electronic and spin states embedded in a complex, wide bandgap environment. The silicon vacancy has ground and electronic states. It also has an electron spin.

In order to obtain enough signal from this single atomic scale defect, Hu manipulates the nanoscale to create an integrated environment for the silicon vacancies that she calls a cavity. Think of this as a breakout room, she says. A place our atomic-scale silicon vacancy can be in an intimate and isolated conversation with its environment.

The cavity recycles the photon energy as it goes back and forth between the emitter and this environment. When the silicon vacancy is placed within this cavity, the signal-to-noise is enormously better, Hu said.

At the end of her lecture, Hu answered audience questions ranging from scalability of her work and mathematical models that enumerate these discoveries, to limiting factors and the use of molecules as active spin states as compared to crystalline semiconductors. Hu concluded her talk by reflecting on Dresselhauss legacy, not only as a great scientist but as someone who was beloved.

This word, she says, means a degree of trust, of willingness to follow, to believe, to listen to. For a scientist and engineer to be beloved in that way, and to have trust in that way, makes the difference between effectiveness and the ability to affect change.

Honoring Mildred S. Dresselhaus

Hu was the second speaker to deliver the Dresselhaus Lecture. Established in 2019 to honor the late MIT physics and electrical engineering professor Mildred Dresselhaus, the Queen of Carbon Science, the annual event features a speaker selected by a committee of MIT faculty from a list of nominations submitted by the MIT community, scholars from other institutions and research laboratories, and members of the general public. The process and lecture are coordinated by MIT.nano, an open access facility for nanoscience and nanoengineering of which Dresselhaus was a strong faculty supporter.

Muriel Mdard, the Cecil H. Green Professor in MITs Department of Electrical Engineering and Computer Science, opened the lecture with an invitation to nominate candidates for a new honor named for Dresselhaus by the Institute of Electrical and Electronics Engineers (IEEE). Established in 2019, the IEEE Mildred Dresselhaus Medal will honor an individual for outstanding technical contributions in science and engineering of great impact to IEEE fields of interest. Were really looking for people who have had an impact that goes beyond the technical, says Mdard. Do consider nominating a worthy colleague, somebody whom you feel reflects well the kind of qualities that made Millie so remarkable.

Nominations for the 2021 Dresselhaus Lecture are broadly accepted and can be submitted on MIT.nanos website at any time. Any significant figure in science and engineering from anywhere in the world may be nominated.

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Evelyn Hu delivers 2020 Dresselhaus Lecture on leveraging defects at the nanoscale - MIT News

COVID-19 airborne transmission research suggests potential therapies | University of Hawaii System News – UH System Current News

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A new University of Hawaii at Mnoa College of Engineering review article presents a breakthrough in multidisciplinary understanding of the airborne transmission of COVID-19 and researchers say they hope the findings will contribute to future public health guidance.

There have been more than 70 million confirmed COVID-19 cases worldwide. However, despite the urgency of the pandemic, the physical modes of COVID-19 transmission are still poorly understood. In particular, transmission by aerosols has recently come under focus. Aerosols are microscopic airborne particles that, due to their small size, can remain suspended in air for a long time, instead of falling directly to the ground.

An integrated review published in ACS Nano by mechanical engineering Professor Yi Zuo and Assistant Professor William Uspal, together with Associate Professor Tao Wei from Howard University, covers the entire exhalation-to-infection pathway. Drawing on aerodynamics, thermodynamics, molecular biophysics and other fields, their review considers how infectious aerosols disperse in the air, deposit in the lung and interact with cell receptors.

During our review of the previous research, we found that a lot of cutting-edge research has not yet been integrated into public health guidelines in understanding COVID-19 transmission, Zuo said. Furthermore, we realized just how much engineering perspectives still have to contribute to the effort against the pandemic.

The team believes that its review may stimulate the development of mitigation approaches, such as ventilation protocols, and new therapeutic interventions, such as surfactant therapy to alleviate COVID-19-induced acute respiratory distress syndrome. Surfactants are substances that, when added to water, reduce surface tension. In several ongoing clinical trials worldwide, natural surfactants extracted from animals lungs have been given to ventilated COVID-19 patients as a supportive therapy to ease breathing, and provide more time for other therapeutic interventions.

According to Uspal, the most urgent message is, Wear masks. Masks are particularly effective for large droplets. Ideally, masks worn by infected, but asymptomatic people would filter out most exhaled droplets before they have a chance to shrink by evaporation and become aerosols.

Zuos research is funded by the National Science Foundation, and Uspals research is funded by the American Chemical Society Petroleum Research Fund.

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Engineers awarded for ongoing research excellence – News – The University of Sydney

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Professor Anna Paradowska

Professor Anna Paradowska has been named recipient of the Australian Neutron Beam Users Group (ANBUG) Neutron Award for her outstanding research in neutron science and leadership promoting the Australian neutron scattering community.

Professor Paradowska has pioneered industrial engagement at Australias Nuclear Science and Technology Organisations (ANSTO) Australian Centre for Neutron Scattering (ACNS), utilising neutron scattering techniques to solve industry problems with particular focus on advanced manufacturing.

Over the years, Professor Paradowska has developed successful collaborations with Australian and global industry as well as universities in the area of advanced and additive manufacturing.

The primary goal of her research is to relate residual-stresses, mechanical and metallurgical properties to manufacturing procedures and integrity requirements of engineering components.

I am delighted with this peer recognition as it is a fantastic feelingto know that my research contributions are being seen and appreciatedby the community, said Professor Paradowska, a co-appointed Professor Practice between the School of Civil Engineering and ANSTO.

Neutron scattering has an enormouspotential to help solve range of industry problems, and the full potential of those various method is yet to be discovered by the industry.

The award is the latest achievement for the international expert in neutron diffraction stress analysis, having previously been named recipient of the ASM Henry Marion Howe Medal for co-authoring materials paperIn Situ Study of the Stress Relaxation During Aging of Nickel-Base Superalloy Forgings.

The ASM Henry Marion Howe Medal is a prestigious prize intended to honour the author(s) whose paper has been selected as the best of those published in a specific volume ofMetallurgical and Materials Transactions.

As part of the project, Paradowska measured residual stresses in the superalloys duringin situheat treatmentson theKowari strain scannerand the same procedure was repeated at other neutron facilities.

The results demonstrated that thenewly-developed induction heating setup could be repeated successfullyon several instruments across three continents and reassure the scientific and industrial community that residual stress relaxation can be measured accurately and systematically.

Furthermore, Professor Jun Huang and Professor Marcela Bilek, who are also members of the University of Sydney Nano Institute have also been honoured for their engineering work.

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Engineers awarded for ongoing research excellence - News - The University of Sydney

New Horizons for research through new adventurous research projects – The University of Manchester

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Dr Golovanov, who leads this research, said: The ability to deliver significant amount of light, at any wavelength, within extremely constrained geometry of the NMR instruments allows us to look in real time at any phototransformations as they happen in front of our eyes in the NMR tube. It can be anything photoreactions, photoenzymes, photo-controlled conformational switches or nano-machines anything.

New Horizons forms part of UKRIs wider Reforming our Business agenda to simplify and streamline processes and practice across the organisation.

Elsewhere at The University of Manchester, Professor Catherine Powell intends to develop new algorithms for forward uncertainty quantification, which allows us to understand how uncertain inputs in mathematical models affects predictions of outcomes of interest. This could have a transformative effect on a wide range of engineering applications involving physics-based models.

EPSRCs 2019 Delivery Plan highlighted the desire to continue promoting excellence in research by investing in new approaches to delivery that are optimised to the specific researcher base and research outputs desired.

Science Minister Amanda Solloway said:It is critical we give the UKs best researchers the resources to drive forward their revolutionary ideas so they can focus on identifying solutions to some of the worlds greatest challenges, such as climate change.

This government funding will allow some of our brightest mathematicians and physicists to channel all their creative ingenuity into achieving potentially life-changing scientific breakthroughs from mathematics informing how we save our rainforests to robotics that will help track cancer faster.

EPSRC Executive Chair, Professor Dame Lynn Gladden, said:New Horizons reflects EPSRCs commitment to funding creative, transformative and ambitious new ideas across our portfolio. In this pilot, we have funded more than 100 projects in the mathematical and physical sciences.

The scheme also piloted a new, simplified applications process designed to minimise the administrative burden of submitting grant applications, thereby enabling researchers to focus on developing their research ideas.

The call for proposals attracted a very positive response in terms of both the number and quality of applications and we look forward to exploring how to include the approaches taken through New Horizons in further areas of our portfolio.

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New collaboration provides opportunity for future water scientists and engineers – Cranfield University

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The first cohort of IWA-Cranfield Scholarship winners have commenced their journey to become the next generation of water scientists and engineers.

Awarded scholarships by the International Water Association and Cranfield, the students will develop their technical understanding and business skills to become leaders in the worldwide fight to improve the resilience and sustainability of water supply and sanitation systems and protect the natural environment.

Selected from more than 500 high quality applicants, 14 full-fee scholarships were awarded by the University across three MSc courses: Water & Wastewater Engineering, Advanced Water Management and Water & Sanitation for Development.

Safe water and sanitation for all

Sharriff Irfan Ulla is one of the recipients of the scholarships and is studying on the Advanced Water Management MSc. He said: It is my desire to take the principle of water should be an essential right, not an entity of privilege forward by making safe water and sanitation available at household level and creating independent water management as standard practice. In a developing country like India, managing water is one of the most significant challenges. I believe that a holistic approach to water management practices will ensure quality water availability for future generations.

Increasing the skills base

Professor Paul Jeffrey, Director of the Water theme at Cranfield University, said: These scholarships across our full range of postgraduate programmes will help develop the next generation of leaders that we desperately need in the water industry, both in the UK and around the world.

If we are to realise the UN Sustainable Development Goal of ensuring availability and sustainable management of water and sanitation for all, then we need to increase the skills base of water scientists and engineers, who can help develop the solutions to these global challenges.

Im extremely grateful for the support of the International Water Association in enabling us to provide these scholarships - together, we are both committed to training and nurturing future technical specialists and leaders for the global water sector.

Nasreen Nasar is also one of the recipients of the scholarships. She said: The Cranfield-IWA excellence scholarship provides an ideal platform to foster and equip future scientists and engineers to take on the current and future challenges in the water and wastewater sector. This resonated very well with my career aspiration, which led me to apply for it. By studying the MSc on Water and Wastewater Engineering at Cranfield University while getting involved with the IWA, Im looking to be a part of a dynamic group of scientists and engineers who are at the forefront of redefining the concept and functionality of water and wastewater treatment plants in the context of a circular economy. It is truly an honour to be selected for this highly esteemed scholarship.

Scientists and engineers at Cranfield are involved in a number of projects that are seeking technological solutions to global challenges of inadequate sanitation, reliable water quality for communities and the impacts of flood and drought on farming. The work on the Nano Membrane Toilet, funded by the Bill and Melinda Gates Foundation, is just one example.

You can find out more about the next funded scholarships here.

About the IWA

The International Water Association (IWA) is a network and an international global knowledge hub open to all water professionals and anyone committed to the future of water. With its legacy of over seventy years, it connects water professionals around the world to find solutions to global water challenges as part of a broader sustainability agenda.

As a non-profit organisation and with a membership in more than 140 countries, the IWA connects scientists with professionals and communities so that pioneering research offers sustainable solutions for a water-wise world. In addition, the association promotes and supports technological innovation and best practices through international frameworks and standards. For more information, please visit iwa-network.org.

Cranfield Universityis a specialist postgraduate university that is a global leader for education and transformational research in technology and management.

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First of its kind at U of T: MIE launches specialized course in 3D printing – U of T Engineering News

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The Department of Mechanical and Industrial Engineering (MIE) is launching a new course to train students in additive manufacturing, commonly known as 3D printing. Launching in Winter 2021, it is the first course of its kind at U of T.

MIE1724: Additive Manufacturing in Engineering Applications focuses specifically on the rapidly evolving and lucrative field, which generates upwards of $13 billion in yearly revenue and is applicable to numerous sectors.

The course is the creation of alumnus Ali Radhi (MIE PhD 1T9), who wanted to provide a graduate-level specialized class that looks at the process of designing and building cost-effective and timely products using novel materials and hardware.

Radhi spoke to MIEs Kendra Hunter about the new course and preparing todays students for the design and fabrication of complex structures.

What inspired you to create this course?

At MIE, I have been involved in the design of lightweight structures and saw there was room to further bridge the fields of materials and manufacturing through a new course. A recent trend in 3D printing is to produce complex structures using materials with properties not usually found in nature, such as invisibility cloaks, and I wanted to address this while giving singular focus to the field of additive manufacturing, 3D printing and their respective applications. Professor Tobin Filleters MIE 1744: Nanomechanics of Materials provided inspiration in expanding this area of knowledge and from there, MIE1724 took shape.

What can students expect from this course?

The course introduces various types of additive manufacturing approaches, including multi-material 3D printing, micro/nano additive manufacturing and 3D bioprinting. MIE1724 is also designed to show the limitation of selected additive manufacturing methods. Characterization of additive manufacturing parts is included as a major course outcome. Ithelps students to integrate design for additive manufacturing aspects in industry product fabrication.

Students get to learn about new 3D printing technologies, and how they are applied to solve problems in security, automation, and more.

The course will first introduce the concept of 3D printing, and then will move into computer-aided design (CAD) for additive manufacturing. Currently, students can request parts to be 3D printed through the Myhal Centres Fabrication Facility but once it is safe to do, they will be able to receive training to use the facility for their own education and research.

How does this course benefit degree and career options?

3D printing is now the primary method of prototyping. More recently, it became the sole method for end-use part production for highly complex structures and/or material content. Dedicated post-secondary education in 3D printing helps fill the talent gap in additive manufacturing as global revenue from these technologies has jumped from $4 billion to $13 billion from 2014 to 2018.

Additive manufacturing shortens design and production processes by enabling companies to streamline prototyping activities, alter supply chains, and evolve end-product manufacturing. The market is growing at a rapid pace and people with a specialization in additive manufacturing will be in demand.

Did you design MIE1724 strictly as an engineering course for engineering students?

No, in fact this course is open to all U of T students. 3D printing is of great interest to many fields such as medicine, architecture and dentistry. The course is structured to highlight the technologys potential, process and applications in those fields and much more. The course also addresses unique fields, such as textiles and cosmetics, and how this technology can be applied. Additionally, the areas of information science, education and graphic design also benefit with over 250 applications of additive manufacturing that can be incorporated into their daily use of technology.

How did your PhD studies at MIE help you develop the skills to create MIE1724?

The PhD program provided a lot of exposure to state-of-the-art fabrication technologies. 3D printing was one of those avenues, and I took part in design projects and competitions that employed such technologies within the facilities at U of T. Furthermore, the teaching assistant and instructor opportunities from the University helped me to identify the knowledge gap in 3D printing from U of Ts broad list of advanced courses. During my PhD studies, collaboration with fellow research groups aided my own research through sharing of knowledge with my network as well as training in high- tech research facilities.

MIE1724 was inspired by Professor Filleter and Professor Eric Dillers (MIE) research both were helpful and supportive in providing insights for a proper scope and delivery for the course. Associate Chair of Graduate Studies for MIE, Professor Murray Thomson (MIE), provided support to address student expectations and Maximiliano Giuliani, Senior Facility Supervisor at the Myhal Centre for Engineering Innovation and Entrepreneurship, provided input on expected knowledge and training for students before using his facilities for 3D printing.

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Tenth Circuit BAP: Bankruptcy Courts Have Exclusive Jurisdiction to Determine Whether Claims Are Estate Property – JD Supra

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In Hafen v. Adams (In re Hafen), 616 B.R. 570 (B.A.P. 10th Cir. 2020), a bankruptcy appellate panel from the Tenth Circuit ("BAP") held that the bankruptcy court is the only court with subject-matter jurisdiction to decide whether a claim or cause of action is property of a debtors' bankruptcy estate. As a consequence, the BAP held that the bankruptcy court abused its discretion by permitting a state court to determine whether creditors had "standing" to sue third-party recipients of allegedly fraudulent transfers. The decision illustrates the distinction between "bankruptcy standing" and "constitutional standing" to sue in federal courts.

Jurisdiction Over Estate Property in Bankruptcy

Federal district courts have "original and exclusive jurisdiction" of all "cases" under the Bankruptcy Code. 28 U.S.C. 1334(a). District courts also have "original but not exclusive jurisdiction of all civil proceedings arising under" the Bankruptcy Code, "or arising in or related to cases" under the Bankruptcy Code. 28 U.S.C. 1334(b). District courts may (and do), however, refer these cases and proceedings to the bankruptcy courts in their districts, which are constituted as "units" of the district courts. 28 U.S.C. 157(a).

A federal district court in which a bankruptcy case is commenced or pending also has exclusive jurisdiction over all of the debtor's property, wherever located, property of the debtor's bankruptcy estate (as defined in section 541(a) of the Bankruptcy Code), and all claims or causes of action involving the retention of bankruptcy professionals. 28 U.S.C. 1334(e). Under section 541(a)(1), the estate includes "all legal or equitable interests of the debtor in property as of the commencement of the case." Accordingly, claims and causes of action belonging to the debtor on the petition date are estate property. See In re Wilton Armetale, Inc., 968 F.3d 273, 280 (3d Cir. Aug. 4, 2020) (citing 11 U.S.C. 541(a)(1); U.S. v. Whiting Pools, Inc., 462 U.S. 198, 205 n.9 (1983); Bd. of Trs. of Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296 F.3d 164, 169 (3d Cir. 2002)).

As the "representative of the estate" with the "capacity to sue and be sued" on its behalf (see 11 U.S.C. 323(a), (b)), the bankruptcy trustee or, by operation of section 1107(a) of the Bankruptcy Code, a chapter 11 debtor-in-possession ("DIP"), has the exclusive authority to assert estate claims and causes of action. Armetale, 968 F.3d at 280. Thus, after a debtor files a bankruptcy petition, the debtor's creditors lack authoritysometimes referred to as "standing"to assert claims that are estate property. Id.; accord In re Emoral, Inc., 740 F.3d 875, 879 (3d Cir. 2014); Highland Capital Mgmt. LP v. Chesapeake Energy Corp. (In re Seven Seas Petrol., Inc.), 522 F.3d 575, 584 (5th Cir. 2008); Logan v. JKV Real Estate Servs. (In re Bogdan), 414 F.3d 507, 51112 (4th Cir. 2005).

In keeping with 28 U.S.C. 1334(e), nearly all courts that have considered the question have concluded that the jurisdiction to determine what qualifies as estate property lies exclusively with the bankruptcy court. See, e.g., Brown v. Fox Broad. Co. (In re Cox), 433 B.R. 911, 920 (Bankr. N.D. Ga. 2010) ("It is generally recognized that '[a] proceeding to determine what constitutes property of the estate pursuant to 11 U.S.C. 541 is a core proceeding under 28 U.S.C. 157(b)(2)(A) and (E),' and that, '[w]henever there is a dispute regarding whether property is property of the bankruptcy estate, exclusive jurisdiction is in the bankruptcy court.'" (citations omitted)); accord Gardner v. U.S. (In re Gardner), 913 F.2d 1515, 1518 (10th Cir. 1990); Brown v. Dellinger (In re Brown), 734 F.2d 119, 124 (2d Cir. 1984); Montoya v. Curtis (In re Cashco, Inc.), 614 B.R. 715, 722 (Bankr. D.N.M. 2020); In re DeFlora Lake Dev. Assocs., Inc., 571 B.R. 587, 593 (Bankr. S.D.N.Y. 2017); In re Brown, 484 B.R. 322, 332 n.2 (Bankr. E.D. Ky. 2012); Mata v. Eclipse Aerospace, Inc. (In re AE Liquidation, Inc.), 435 B.R. 894, 90405 (Bankr. D. Del. 2010); Heolena Chem. Co. v. True (In re True), 285 B.R. 405, 412 (Bankr. W.D. Mo. 2002); Manges v. Atlas (In re Duval Cty. Ranch Co.), 167 B.R. 848, 849 (Bankr. S.D. Tex. 1994).

However, in the interests of justice or comity with state courts, a bankruptcy court may relinquish its exclusive jurisdiction to make that determination by abstaining under 28 U.S.C. 1334(c)(1) in deference to another tribunal better suited to adjudicate the issue. See In re Ament, 2020 WL 354888, at *4 (Bankr. D.N.M. Jan. 21, 2020) ("Construing 1334(c)(1) and 1334(e) together, it is clear that, although the bankruptcy court has exclusive jurisdiction over property of the estate once a petition is filed, the bankruptcy court may choose to abstain from exercising its jurisdiction and modify the stay to allow a state court to divide community property."); accord In re Maxus Energy Corp., 560 B.R. 111, 120 (Bankr. D. Del. 2016); In re Thorpe, 546 B.R. 172, 177 (Bankr. C.D. Ill. 2016), aff'd, 569 B.R. 310 (C.D. Ill. 2017), aff'd, 881 F.3d 536 (7th Cir. 2018).

Hafen

Several years before filing a chapter 7 case in 2004 in the District of Utah, securities broker-dealer Roy Nielson Hafen ("debtor") operated a Ponzi scheme that defrauded investors. Although the debtor's chapter 7 schedules listed the defrauded investors as creditors and the creditors were notified of the bankruptcy filing, the investors did not file proofs of claim or otherwise participate in the bankruptcy case. The debtor received a bankruptcy discharge in 2004.

Alleging that the debtor had concealed assets, several investors sought to reopen the case 13 years later. Without seeking bankruptcy court authority, the investors also sued the debtor, his wife, and several related entitles in state court seeking to avoid and recover fraudulent transfers and undisclosed assets under state law.

The debtor argued that the causes of action in the state court complaint belonged to his bankruptcy estate and filed a motion in the bankruptcy court to sanction the investors for violating the discharge injunction under section 524(a) of the Bankruptcy Code. In connection with the hearing on the motion, the debtor and the investors agreed that the state court could decide whether the investors had standing to sue. The debtor's newly appointed chapter 7 trustee did not weigh in on the matter.

The bankruptcy court denied the motion for sanctions and ruled that whether the investors had standing to sue could be decided by the state court. In so ruling, the bankruptcy court relied on the investors' representation that they did not intend to collect any judgment from the debtor but from third parties, which is permitted under section 524(e). The debtor appealed to the BAP.

The BAP's Ruling

A three-judge panel of the BAP reversed the ruling and remanded the case below.

Writing for the panel, Judge Terrence L. Michael held that the bankruptcy court erred by not deciding whether the investors had "standing" to assert the claims asserted in their complaint. Judge Michael looked to 28 U.S.C. 1334(e)(1) and the Tenth Circuit's determination in Gardner that lawmakers intended "to grant comprehensive jurisdiction to the bankruptcy courts so that they might deal efficiently and expeditiously with all matters connected with the bankruptcy estate" (internal quotation marks and citations omitted). On the basis of these authorities, he wrote that "[t]he jurisdiction to determine what is property of the estate lies exclusively with the bankruptcy court."

Judge Michael explained that the investors' standing to assert fraudulent transfer claims totally depended on whether such claims constituted property of the bankruptcy estate, "an issue over which the Bankruptcy Court has exclusive jurisdiction." If the fraudulent transfer claims were estate property, he wrote, "only the chapter 7 trustee has standing to pursue those claims." According to Judge Michael, standing to pursue assets that were not disclosed in the debtor's bankruptcy filing also hinged on whether the claims belonged to the estate. In both instances, he ruled, the bankruptcy court did not have discretion to allow the state court to resolve the standing question.

The BAP also faulted the bankruptcy court's denial of the debtor's motion to sanction the investors. The bankruptcy court found no violation of the discharge injunction because the investors sought to establish the debtor's liability only so that they could recover any judgment from third parties. According to Judge Michael, if the claims were property of the estatemeaning that the investors lacked standing"the 524(e) safe harbor applicable to claims against entities separate from the Debtor may not apply." However, because the evidence did not establish whether the claims were estate property, the BAP remanded the case to the bankruptcy court to "determine whether the causes of action are property of the bankruptcy estate, and, after making that determination, determine whether the Investors had standing to bring those claims."

Outlook

The BAP's analysis of the issues in Hafen in terms of "standing" to assert claims belonging to the bankruptcy estate raises an interesting question regarding the confusing nature of "standing" in bankruptcy. "Standing" is the ability to commence litigation in a court of law. It is a threshold issuea court must determine whether a litigant has the legal capacity to pursue claims before the court can adjudicate the dispute. In bankruptcy cases, the concept most commonly arises in connection with: (i) the right of parties-in-interest (e.g., creditors, shareholders, and committees) to participate in chapter 11 cases; and (ii) the ability of parties other than a bankruptcy trustee or DIP to assert claims or causes of action that may be property of the debtor's bankruptcy estate. This "bankruptcy" or "statutory" standing is distinct from the "constitutional standing" to sue, which is jurisdictionalif a potential litigant lacks constitutional stating, the court lacks jurisdiction to adjudicate the dispute.

The distinction between constitutional and bankruptcy standing was recently examined by the U.S. Court of Appeals for the Third Circuit in Armetale, in which the court of appeals held that the ability of a creditor to sue in bankruptcy is not a question of standing but, rather, an issue of statutory authority. The Third Circuit explained that, in accordance with the U.S. Supreme Court's decision in Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 125 (2014), constitutional standing has only three elements: (i) there must be "a concrete and particularized injury in fact"; (ii) the injury must be "fairly traceable" to the defendant's conduct; and (iii) "a favorable judicial decision" would likely redress the injury. Armetale, 968 F.3d at 291 (citing Lexmark, 572 U.S. at 125). Once a plaintiff satisfies those elements, the action "presents a case or controversy that is properly within federal courts' Article III jurisdiction." Id.

Guided by Lexmark and the Seventh Circuit's ruling in Grede v. Bank of N.Y. Mellon, 598 F.3d 899, 900 (7th Cir. 2010), where the court observed that bankruptcy "standing" is doctrinally "abnormal," the Third Circuit concluded in Armetale that "a litigant's 'standing' to pursue causes of action that become the estate's property means its statutory authority under the Bankruptcy Code, not its constitutional standing to invoke the federal judicial power." It accordingly ruled that, although a creditor ordinarily would have constitutional standing to pursue a claim belonging to a bankruptcy estate, it may lack statutory authority to assert the claim unless the trustee or DIP has abandoned the claim or the creditor has suffered a direct, particularized injury.

The U.S. Court of Appeals for the Sixth Circuit also recently examined bankruptcy standing in In re Capital Contracting Co., 924 F.3d 890 (6th Cir. 2019). In that case, a law firm withdrew its claim for fees owed by a chapter 7 debtor it had represented in pre-bankruptcy state court litigation as part of a settlement of the chapter 7 trustee's legal malpractice claims against the law firm. After discussing the distinction between bankruptcy and constitutional standing, the Sixth Circuit ruled that the law firm did not have Article III standing to appeal the bankruptcy court's order approving the trustee's final report, based on the report's failure to list the debtor's appellate rights in the state court lawsuit as an asset. According to the Sixth Circuit, the failure to list those rights as an asset could not financially harm the law firm because it had settled with the trustee and withdrawn its fee claim.

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Tenth Circuit BAP: Bankruptcy Courts Have Exclusive Jurisdiction to Determine Whether Claims Are Estate Property - JD Supra

AMC could benefit from bankruptcy, analysts say – CNBC

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Street performers in Minnie Mouse costumes pass in front of an AMC movie theater at night in the Times Square neighborhood of New York, Oct. 15, 2020.

Amir Hamja | Bloomberg | Getty Images

For the world's largest cinema chain, bankruptcy could be the best option to survive the coronavirus pandemic.

Thecrisis has battered theaters since March, crunching their bottom lines, but no one has been hit harder than AMC. The cinema chain headed into the pandemic with nearly $5 billion in debt, which it had amassed outfitting its theaters with luxury seating and from buying competitors such as Carmike and Odeon.

Since January, shares of the company have plummeted more than 60%, including 30% over the last five days.

Last Friday, AMC said Mudrick Capital Management agreed to invest $100 million to help the cash-strapped movie theater chain survive the pandemic. However, AMC will still need at least $750 million in liquidity to fund cash requirements through 2021.

"Frankly I believe that Chapter 11 is really the only path that will lead to AMC surviving," said Doug Stone, president of Box Office Analyst. "I cannot imagine that there is an appetite out there for another $750 million of stock sales, and any debt they assume will be at astronomical rates."

AMC has been focused on fundraising for months. It already renegotiated its debt to improve its balance sheet this year and is exploring several ways of acquiring additional sources of liquidity. It is also trying to figure out ways to increase attendance.

"The easy answer is that if they declare bankruptcy, it is likely to be a reorganization rather than a liquidation," said Wedbush analyst Michael Pachter. "In bankruptcy, they can wipe out their lease obligations and renew those leases that make sense, so arguably they can lower their overall operating expense."

As coronavirus cases have spiked in the autumn and winter months, studios have postponed major blockbusters until mid-2021 and some have opted to release major movies in theaters and on streaming platforms at the same time, cutting into potential ticket sales.

The hope is that with a vaccine, Covid cases will decrease substantially and audiences will be more willing to return to theaters. This, in turn, will give studios confidence to keep major film titles on the calendar. Without fresh content, moviegoers won't return in large enough numbers to give movie theaters a true financial lift.

Still, a vaccine might not be widely available to the public until mid-2021. So while the news is promising, it does not fix the near-term issues that movie theaters are facing.

"I think that now that vaccines are rolling out, creditors and landlords will be willing to work with them," Pachter said."It was hard to offer them more credit when there was no light at the end of the tunnel, but it's likely we will be back to something approaching normal by midyear, so a reorganization makes eminent sense."

AMC did not immediately respond to CNBC's request for comment. The company has reiterated in SEC filings that bankruptcy is a possibility of the company can't raise more funds.

In pre-pandemic times, the theater industry was profitable. In 2019, the domestic box office had its second-best year ever, hauling in $11.4 billion, just shy of the $11.9 billion record posted in 2018. Prior to the global outbreak, 2020 had been poised to reach a similar level.

Now, movie theater chains are desperately renegotiating deals with lenders and landlords and trying to find creative ways to generate revenue. Most major cinemas are now offering cheaper private theater rentals as a way to entice reluctant moviegoers. Others have transformed parking lots into concert venues, launched trivia nights and even negotiated deals with colleges to rent out the space for in-person learning.

Cinema chains face tough headwinds in the first part of 2021, given the limited slate of new films and an expected elevated level of coronavirus cases.

"January is shaping up to be a very challenging month with little of consequence in terms of product," Stone said. "The rollout of vaccines isn't likely, in my mind anyway, to make much of an impact until at least late in Q2. I don't believe AMC can manage without restructuring until then."

But, there is hope for AMC and other domestic movie theater chains, said Eric Wold, senior analyst at B. Riley Securities.

"We have already seen very strong movie-going response within those countries that opened up earlier than the U.S., especially within China, which, we believe, provides a strong early look into what can be expected here in the U.S,." Wold said.

"And given what AMC and many other exhibitors have learned during the pandemic, in terms of operating more efficiently, along with the flexibility of the company's landlord partners, we could actually see AMC emerge from this in a stronger position operationally than prior to the pandemic that would provide a path toward deleveraging the balance sheet once again," he said.

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AMC could benefit from bankruptcy, analysts say - CNBC

Top 10 Changes to Consumer Bankruptcy Proposed in the Consumer Bankruptcy Reform Act of 2020 – JD Supra

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On December 9, 2020, Congressional Democrats, including Elizabeth Warren (D-Mass.) and Jerrold Nadler (D-N.Y.), proposed sweeping legislation that would overhaul consumer bankruptcy law. The proposed changes generally make it easier for consumers to access the bankruptcy system and discharge their debts. Below is a discussion of 10 critical changes proposed in the Consumer Bankruptcy Reform Act of 2020 (CBRA).

The CBRA proposes to replace the current consumer bankruptcy Chapters 7 and 13 with the all-new Chapter 10. Currently, Chapter 7 allows consumers with nominal disposable monthly income to discharge their debts after liquidating any non-exempt assets to repay their creditors. Chapter 13 provides for consumers to discharge their debts after paying their disposable income to creditors under a three- or five-year repayment plan.

Under the CBRA, consumers with debts less than $7.5 million would file under the new Chapter 10. Consumers with debts greater than $7.5 million would seek relief under Chapter 11. To seek relief under Chapter 10, consumers will need to file a petition and some additional schedules and statements, similar to those currently filed pursuant to Bankruptcy Code section 521.

The most recent major amendments to the Bankruptcy Code were passed as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Under BAPCPA, consumers discharges were contingent on participation in a credit counseling course and filing a certificate of completion in their bankruptcy cases. The new CBRA eliminates this seemingly arbitrary credit counseling requirement.

Pre-COVID-19, consumers were required to appear in person for section 341 meetings where they were examined under oath by bankruptcy trustees and creditors. As the nation quarantined, 341 meetings began occurring remotely, via conference calls and videoconferencing. Under the CBRA, consumer debtors will still be examined at 341 meetings, but those meetings can be conducted remotely. Additionally, 341 meetings will be scheduled at times that do not conflict with consumers work schedules.

Under the current Bankruptcy Code, consumers bankruptcy cases may be converted to a different chapter or dismissed as abusive if consumers choose to spend their money on certain luxury expenses, such as private school tuition, expensive vehicles payments, and support payments for adult children. The CBRA eliminates the analysis of whether consumers are spending their disposable income on acceptable, non-luxury expenses. Instead, the CBRA looks only to whether consumers have funds to make a minimum payment obligation based on the value of their non-exempt assets and their annual income.

Consumers in Chapter 10 can file one or more plans, including (1) a Residence plan, which addresses mortgages on consumers principal residences; (2) a Property plan, which addresses debts secured by other property; and (3) a general repayment plan, which addresses unsecured debts, such as credit card, medical, and student loan debts. Consumers who must pay a minimum payment obligation will not receive a discharge without confirming a repayment plan.

Residence and property plans under the CBRA allow consumers to change loan interest rates, adjust amortization schedules, and cure defaults. Unlike the current Chapter 13, consumers can change the terms of mortgages on their principal residences under the CBRA. However, unless the residence or property plans are proposed in conjunction with a repayment plan, consumers will not receive discharges with respect to the residence or property debts. Secured creditors retain their liens until receipt of the full amounts owed as of the plans effective dates. Consumers have either 15 years or five years after the maturity date, whichever is longer, to make payments toward secured debts. Significantly, if a consumer defaults under a residence or property plan, the secured creditor is stayed from taking action until the consumer is 120 days delinquent for mortgages and 90 days delinquent for other liens.

Currently, consumers who file for Chapter 7 bankruptcy relief generally receive their discharges in approximately 90 days. Consumers under Chapter 13 receive their discharges after the successful completion of a three- or five-year repayment plan. Instead of these waiting periods, the CBRA provides that consumers who have insufficient non-exempt assets and income to trigger a minimum payment obligation will receive their discharges immediately. Notably, though, certain debts under section 523 of the Bankruptcy Code will still be non-dischargeable. Also, liens on property will continue to survive discharge under the CBRA.

The CBRA evaluates consumers abilities to make payments to their creditors based on the amount of their non-exempt assets and their income. Consumers who must make payments to their creditors will propose repayment plans under which their minimum payment obligation must be paid over a three-year period. Creditors would receive payment under Chapter 10 plans pursuant to the current priority scheme. Plans are confirmed so long as they are feasible, not proposed in bad faith, and pay the full minimum payment obligation amount. Additionally, consumers receive their discharges at the time of confirmation, rather than after the successful completion of plan payments.

Currently, some consumers cannot afford the required pre-filing, lump sum payment for legal representation in a Chapter 7 bankruptcy case. Insufficient cash may lead consumers who would have been eligible for Chapter 7 relief to file under Chapter 13, which allows for debtors attorneys fees to be paid over the course of the case. Consumers in these situations often do not successfully complete their Chapter 13 plans, do not repay their creditors, and do not receive discharges. The CBRA remedies this issue, allowing for consumers attorneys to be paid over time. This provides access to bankruptcy relief for those consumers who would otherwise not be able to afford to file for bankruptcy.

The CBRA amends section 523 to allow consumers to discharge certain previously non-dischargeable debts, including student loan debts. This includes both private and federal student loans. Under the CBRA, student loan debts are generally treated like other unsecured consumer debts.

Beyond amending the Bankruptcy Code, the CBRA also revamps some federal consumer protection financial laws. A new unclean hands provision provides for claims to be disallowed if the claimholder, or its predecessor, violated a federal consumer financial law with regards to the consumer. Additionally, the Fair Debt Collection Practices Act (FDCPA) is amended to provide that filing a proof of claim in bankruptcy for stale debt (i.e., debt that is non-collectable under the applicable statute of limitations) is an unfair practice. The FDCPA is further expanded to provide that collection of or attempts to collect discharged debts, other than those voluntarily paid by consumers, are also unfair practices. To watch over federal consumer protection financial laws in connection with bankruptcies, the CBRA creates a new Consumer Bankruptcy Ombuds at the Consumer Financial Protection Bureau (CFPB).

We will keep you updated of new developments as the CBRA makes its way through Congress.

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Top 10 Changes to Consumer Bankruptcy Proposed in the Consumer Bankruptcy Reform Act of 2020 - JD Supra

Retail bankruptcies in 2020 hit the highest levels in more than a decade, and experts say there are more to come – MarketWatch

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There were dozens of retail bankruptcies in 2020, and experts say the pain isnt over yet.

S&P Global Market Intelligence tallied 49 bankruptcies in the retail space as of mid-November, including Ann Taylor parent Ascena Retail Group Inc. ASNAQ, +4.07%, luxury department store Neiman Marcus, home goods specialists Sur La Table Inc. and Brooks Brothers Group Inc.

Thats the largest number of bankruptcies since 2009, during the financial crisis.

COVID-19 was the straw that broke many ailing retailers.Companies that were already struggling to keep up with trends, invest innecessary digital upgrades and shift to modern customer experiences simplycouldnt cope with the added pressure of store closures, a massive shift toe-commerce, safety protocols and other side effects of the coronavirus.

The pandemic has accelerated what was going to happen in anumber of years in a shorter period of time, said Mickey Chadha, Moodys vicepresident. The names that have filed for bankruptcy probably were pulledforward.

Read: U.S. will remain biggest retail market as government stimulus, e-commerce push the nation ahead of China

In addition to stores closing due to bankruptcy and restructuring, many retailers have been using the pandemic period to reconsider their fleet of stores. Gap Inc. GPS, +2.07% and Childrens Place Inc. PLCE, +1.22% are just two of the retailers that have talked of rightsizing their store fleets.

Coresight Research counted 8,401 store closures year-to-date in a Dec. 4 report.

With vaccine distribution ramping up and 2021 around thecorner, a retail recovery isnt going to happen like the flip of a switch.Instead, experts and analysts say there are more retail bankruptcies loomingbefore things get better.

There are still a lot of names that are in distress and weak in retail and apparel, said Chadha. The pandemic will accelerate the trends making the weak weaker and the strong stronger.

Watch: How to pick winners in the retail sector amid the pandemic

On a positive note, the bankruptcy process is intended togive businesses that need it a second chance.

In a general sense there might be a stigma about a bankruptcy. We view the bankruptcy process as a tool to help companies restructure their business and balance sheets, said Dan Guyder, partner at international law firm Allen & Overy.

And its a positive for investors to help a company moveback to growth. There might be some broken glass along the way, but thats thecycle of life for some companies.

In recent weeks, J.C. Penney Co. Inc. JCPNQ, +7.63%, for example, has emerged from bankruptcy and has a number of plans to grow the business, including a new womens brand and a beauty strategy.

Consumers need torecover as well

Its not just retailers that have to recover from the coronavirus-induced economic slump. Shoppers do as well. With government protections against foreclosure and eviction expiring and with the additional government stimulus measures still very uncertain, consumers now have to rethink personal budgets and perhaps tighten up spending habits.

This could throw even the best-laid retailer plans intodisarray.

And: Americans are draining their checking accounts as stimulus talks drag on

Theres more pressure on consumers to redirect availablecash to meet those obligations, said Guyder.

Under normal circumstances, the retail industry is a very organized one, which makes the uncertainty brought on by the pandemic - and a bankruptcy perhaps more difficult for retailers to manage.

Retail is a business of seasonality, depending oncategories and time of year, you see growth or margin deterioration, said MattKatz, managing partner at global advisory SSA & Co. Bankruptcy doesnthave a season.

Taking into account that consumers are going to need time to recover as well is something that retailers have to consider.

People are going to have to replenish savings and nest eggs. Theyll probably owe money to landlords and other obligations, said Katz. [T]heres some catch-up theyre going to have to do to put their finances back in place. Thatll taking some time. Were building that thought process into client plans.

Keeping balancesheets in check will be key in 2021

To be sure, some retail categories thrived during the pandemic, including essential retailers like Walmart Inc. WMT, +0.46% and Target Corp. TGT, -0.26% (shares up 22.4% and 34%, respectively), warehouse retailers like Costco Wholesale Corp. COST, +0.23% and BJs Wholesale Club Holdings Inc. BJ, +2.45% (shares up 25.7% and 63.4%, respectively) and home goods retailers including Wayfair Inc. W, +4.38% and At Home Group Inc. HOME, +3.07% (up 202.2% and 190.6%, respectively).

The Amplify Online Retail ETF IBUY, +2.06% has skyrocketed 121.2% for the year to date and the SPDR S&P Retail ETF XRT, +1.88% is up 35.6% for the period. Both have far outpaced the benchmark S&P 500 index SPX, +0.58%, which has gained 14.6%.

And experts see improvement coming in 2021, particularly forthose categories that took a big hit in 2020.

Moodys is forecasting 516% year-over-year operating profit growth at department stores next year, reaching $1.2 billion; a 489% operating profit boost at off-price retailers, to $4.9 billion; and a 114% increase in operating profit growth at apparel and footwear retailers, to $3.2 billion.

But November retail numbers demonstrate that that path to recovery wont be a smooth. Despite the holiday shopping season, sales fell 1.1% and October sales were revised down.

See: Retail sales sink 1.1% in November as COVID-19 buffets restaurants and economy

For the retailers thathaveexcelled during theCOVID-19 pandemic, wrote Bank of America analysts led by Elizabeth Suzuki, thecomparisons in 2021 get particularlytoughin the middle of the year.The relativelydisadvantaged retailers (non-essential and away-from-homecategories) will have easier year-over-year comparisons in 2021 and couldexperience outsized growth relative to the 2020 winners.

It will be critical for retailers to keep their balancesheets in check going forward.

A lot of names that are weak in the space are private-equityowned, said Moodys Chadha. The leverage of these names is high. The only wayto avoid some sort of distress exchange or bankruptcy will be to improveprofitability, which will be difficult.

The other option is to cut debt, which will require cash.Either way, these companies need to right their balance sheet to besustainable, Chadha said.

If a company needs to take on more debt, Greg Portell, headof global consumer industries and retail at global management consulting firmKearney, says intentionality of the debt is significant.

If youre going to put debt on your balance sheet, you wantto make sure its driving expansion and growth, he said. Many that filed forbankruptcy had debt that was financing mechanism not growth.

Portell thinks disappointing earnings from the holidays will drive more bankruptcy filings.

We will see another wave in the first and second quarter based on the fallout from the holiday season, he said. Consumer spending is strong and doing its part, but not everyone is going to win.

Dont miss: No one likes to admit theyre struggling: Americans are feeling guilty this Christmas about their finances. Heres why

And while many are waiting for things to get back tonormal, it may be more accurate to look towards a new normal.

Looking ahead, retailers are hoping that the vaccinerollout will return some normality to our lives heading into 2021, allowingretailers to recoup their losses from 2020, said MarwanForzley, chiefexecutive ofVeem,a payments platform that works with thousands ofU.S.retailers.

However, while brick-and-mortar stores may regain some oftheir popularity as things start to look more normal again, the pandemic hascertainly altered the way we shop forever and e-commerce will still be anessential revenue stream for retailers, regardless of their size.

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Retail bankruptcies in 2020 hit the highest levels in more than a decade, and experts say there are more to come - MarketWatch

J.C. Penney closing more stores after exiting bankruptcy. Will your store close in March 2021? See the list. – USA TODAY

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The coronavirus pandemic may have been the last straw for the struggling J.C. Penney company. Wochit

J.C. Penney will close more stores in the springafter alreadyclosing 150-plus stores since filing for bankruptcy.

The retailer, which emerged from bankruptcy this month after beingacquired by mall owners Simon Property Group and Brookfield Asset Management, Inc., will close another 15 stores by the end of March, officials confirmed to USA TODAY Thursday.

"As part of our store optimization strategy that began in June with our financial restructuring, we havemade the decision to close an additional 15 stores," J.C. Penney said in a statement to USA TODAY. "These stores will begin liquidation sales later this month and will close to the public in mid to late March."

Target Christmas Eve 2020: Target announces Christmas Eve ordering deadline for pickup and same-day delivery services

Shopping on TikTok?: Walmart to begin selling on the video platform with livestream event Friday

The department store chain was one of the the largest retailers to file for bankruptcy protectionduring thecoronavirus pandemic. J.C. Penney filed forChapter 11in mid-May 2020 after years of sales declines and two months of disruption from the pandemic.It originally said it plannedto close about29% of its 846 stores or 242 locationsin bankruptcy.

"While store closure decisions are never easy, our store optimization strategy is intended to better position JCPenney to drive sustainable, profitable growth and included plans to close up to 200 stores in phases throughout 2020," the company said in its statement to USA TODAY.

According to a recent report from real estate data tracker CoStar, more than 40 major retailers have declared bankruptcy and more than 11,000 stores have been announced for closure in 2020, which beats past store closings records.

Liquidation sales have been handled differently during COVID-19 with fewer shoppers allowed into stores based on state and local regulations.

The following stores are slated to close in mid to late March and will begin liquidation sales later in December.

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Contributing: Nathan Bomey, USA TODAY

Follow USA TODAY reporter Kelly Tyko on Twitter:@KellyTyko

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J.C. Penney closing more stores after exiting bankruptcy. Will your store close in March 2021? See the list. - USA TODAY

Another Bankruptcy Court Weighs In On Postpetition Interest – Insolvency/Bankruptcy/Re-structuring – United States – Mondaq News Alerts

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Cuker Interactive, LLC filed a Chapter 11 bankruptcy petition onDecember 13, 2018, in the United States Bankruptcy Court for theSouthern District of California. Because it was solvent atconfirmation, the debtor proposed to pay secured creditors in full,with interest at the contract rate, and general unsecured creditorsin full, with postpetition interest at the "legal rate,"or a rate determined by the Court that leaves the creditorsunimpaired.1 But what rate is that?

Section 1124(1) provides that where a Chapter 11 plan, and notthe Bankruptcy Code, "impairs" a claim or interest, theimpaired class is entitled to vote on the plan unless it"leaves unaltered the legal, equitable, and contractualrights" of the holders.2 In this case,unsecured creditors argued that they were "impaired"because the plan did not require the debtor to pay postpetitioninterest at the contractual rate or a higher state law judgmentrate.3 Bankruptcy Judge Adler disagreedwith the unsecured creditors' characterization of the plan,noting that the plan instead calls for either the federal judgmentrate, or a "rate determined by the Court for their claims tobe 'unimpaired.'"4

Thus, the "discrete issue here is what is the rate ofpostpetition interest that must be applied for the Creditors'unsecured claims to be unimpaired?"5 InIn re Cardelucci, 285 F.3d 1241 (9th Cir. 2002), the NinthCircuit held that the "interest at the legal rate" due togeneral unsecured creditors of a solvent chapter 11 debtor is thefederal judgment rate.6 While the generalunsecured creditors argued that In re Cardelucci isinapplicable because the Ninth Circuit addressed impairment under 726(a)(5) and 1129(a)(7), not 1124(1), JudgeAdler disagreed, noting that the "Ninth Circuit phrased itsholding broadly to apply to all unsecured claims."7 In reaching their conclusion, theNinth Circuit also relied heavily on In re Beguelin, 220B.R. 94 (BAP 9th Cir. 1998), wherein a Bankruptcy Appellate Panellikewise held that solvent debtors must pay postpetition interestto unsecured creditors at the federal judgment rate.8 Both the Ninth Circuit and the BAPstated that they favored applying the federal judgment rate becauseit promotes uniformity and efficiency.9

Further, in In re PG&E Corp., 610 B.R. 308 (Bankr.N.D. Cal. 2019), another bankruptcy court directly addressed theapplicability of In re Cardelucci to"impairment" under 1124.10There, reasoning that (1) the Ninth Circuit did not narrow theapplication of its holding to "impaired claims," and (2)a uniform rate ensures equitable treatment of creditors, thePG&E court determined that it was bound by In reCardelucci.11

The creditors argued that Judge Adler should adopt the"solvent-debtor exception" applied by several otherCircuit Courts, which "enforces the state law rights ofunsecured creditors in a solvent-debtor case, including their rightto receive postpetition interest at their contractual rate."12 On remand, the UltraPetroleum court held that "where the claims of unsecuredcreditors are 'unimpaired' they must receive postpetitioninterest at their contractual rate, or otherwise be given theopportunity to vote on the plan."13There, the bankruptcy court reasoned that the principle behind the"solvent-debtor exception" is that a "debtor mustrepay its debts in full when it has the means to do so", andthat for solvent debtors, "a bankruptcy court's role ismerely to enforce the contractual rights of the parties.14

While Judge Adler "understands the rationale forapplying" the exception, she noted both that she is bound bythe Ninth Circuit's decision in Cardelucci, and thatthe application of the solvent-debtor exception to larger casesposes a significant administrative issue.15 Asa result, Judge Adler held that the applicable "legalrate" at which a solvent debtor must repay unsecured creditorsis the federal judgment rate.16

Footnotes

1. In re Cuker Interactive, LLC, No. BR18-7363-LA11, 2020 WL 7086066, at *1 (Bankr. S.D. Cal. Dec. 3,2020).

2. Id. (citing 11 U.S.C. 1124(1)).

3. In re Cuker Interactive, 2020 WL 7086066,at *2.

4. Id.

5. Id.

6. In re Cuker Interactive, 2020 WL 7086066,at *2 (citing In re Cardelucci, 285 F.3d at1234-35).

7. Id. (citing In re Cardelucci, 285F.3d at 1234).

8. In re Cuker Interactive, 2020 WL 7086066,at *2 (citing Beguelin, 220 B.R. at101).

9. Id.

10. Id. at *3.

11. Id. (citing In re PG & E,610 B.R. at 312-13, 315).

12. Id. at *3 (citing In re UltraPetroleum Corp., 943 F.3d 758 (5th Cir. 2019) (remanding,acknowledging potential applicability of solvent-debtor exception)(additional citations omitted).

13. Id.

14. Id.

15. Id. at *4.

16. Id. at *5.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.

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Another Bankruptcy Court Weighs In On Postpetition Interest - Insolvency/Bankruptcy/Re-structuring - United States - Mondaq News Alerts

Covia expects to exit bankruptcy protection by the end of the year – Crain’s Cleveland Business

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Independence-based Covia Holdings Corp. (OTC PINK:CVIAQ), a minerals and materials supplier for industrial and energy markets that filed for Chapter 11 bankruptcy protection, expects to emerge from bankruptcy at the end of the year.

Covia said in a news release issued Monday afternoon, Dec. 14, that the U.S. Bankruptcy Court for the Southern District of Texas, in Houston, has confirmed the company's reorganization plan. The confirmation order "marks a key milestone in the company's reorganization process," Covia said in the release. The company said it anticipates completing the process "at the end of 2020."

In a statement, Richard Navarre, Covia's chairman, president and CEO, said, "We are pleased with the results of this hearing, and thank our employees, customers, vendors, lenders and creditors for helping us achieve this positive outcome. Upon emergence, we will reduce our long-term obligations by over $1 billion, which will significantly improve our capital structure and cash flow profile and allow us to be an even stronger partner to our stakeholders."

Covia's bankruptcy petition, filed at the end of June, showed it had assets and liabilities each in the range of $1 billion to $10 billion. At the time, Bloomberg reported that holders of the term-loan claims and swap agreement claims "will receive $825 million in take-back debt and 100% of the equity in a reorganized company."

Court documents related to the bankruptcy can be found here, at a website hosted by the company's claims agent, Prime Clerk.

The company's shares at present are virtually worthless, trading at less than a penny per share.

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Covia expects to exit bankruptcy protection by the end of the year - Crain's Cleveland Business

Here Are the Major Retailers That Have Filed for Bankruptcy in 2020 – JCK

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Brick-and-mortar retailers have been acutely challenged in 2020, with the pandemic precipitating monthslong business closures across the U.S., along with business-dampening (but necessary) safety measures including limitations on store foot traffic and opening hours.

This year, Black Fridaytypically the most lucrative retail day of the calendar yearexemplified how dire the environment has become for retailers. According to analytics firm Sensormatic Solutions, shopper visits on Black Friday dropped by 52.1% compared to 2019. Online spending was strongand has been throughout the pandemicaccording to several reports. But that isnt offsetting the losses retailers are experiencing in stores.

Twenty-nine major retailers have filed for bankruptcy in 2020, including a handful that sell jewelry, both fine and fashion: Neiman Marcus, Lord & Taylor, J. Crew, and J.C. Penney.

Here are all the corporate retailers that filed for bankruptcy in 2020, with the dates on which they filed for protection:

SFP Franchise Corp. (filed Jan. 23)Pier 1(filed Feb. 17)Art Van Furniture(filed March 9)Bluestem Brands(filed March 9)Modells Sporting Goods(filed March 11)True Religion (filed April 13)Roots USA(filed April 29)J. Crew(filed May 4)Aldo(filed May 7)Neiman Marcus(filed May 7)Stage Stores(filed May 11)J.C. Penney(filed May 15)Centric Brands(filed May 18)Tuesday Morning(filed May 27)GNC(filed June 23)G-Star Raw(filed July 3)Lucky Brand(filed July 3)Sur La Table(filed July 8)Brooks Brothers(filed July 8)Muji USA(filed July 10)RTW Retailwinds(filed July 13)The Paper Store(filed July 14)Ascena(filed July 23)Tailored Brands (owner of Mens Wearhouse, Jos. A. Bank, Moores Clothing for Men, and K&G Fashion Superstore; filed Aug. 2)Lord & Taylor(filed Aug. 2)Stein Mart(filed Aug. 12)Century 21(filed Sept. 10)Furniture Factory Outlet(filed Nov. 5)Guitar Center(filed Nov. 21)

Top: Neiman Marcus at Hudson Yards (photo courtesy of Neiman Marcus)

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Here Are the Major Retailers That Have Filed for Bankruptcy in 2020 - JCK

The coming wave of COVID-19 bankruptcies and how to mitigate them – MIT Sloan News

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With a handful of prominent companies already buckling under the economic fallout from the coronavirus, new research indicates that bankruptcies are set to rise even higher as debt-laden businesses succumb to the effects of COVID-19.

Given that U.S. GDP contracted by 9.5% in the first two quarters of 2020, the authors of a working paper, Sizing Up Corporate Restructuring in the COVID Crisis, set out to determine how many firms will fail, list the challenges those bankruptcies will present to courts and financial markets, and identify potential policy solutions.

To estimate the upcoming increase in financial distress, the researchers tracked the U.S. unemployment rate and the frequency of businesses going bankrupt from 1980 to the first quarter of 2020. (Historically, bankruptcies in the U.S. have closely tracked the unemployment rate.)

The researchers also forecast bond ratings downgrades and defaults and examined the impact of reduced revenues and profits on corporate balance sheets.

Their findings: The impact from COVID-19 on firm profits and revenues so far is comparable to the worst quarter of the 2008 2009 financial crisis.

Based on a 9.2% unemployment rate in the fourth quarter of 2020 (as projected in September by the Survey of Professional Forecasters), the authors initially predicted that bankruptcies would finish the year 140% higher than they were a year ago, with the bulk yet to come.

Better news than anticipated on the unemployment front through the fall (but not most recently) might bring that number down a bit, saidDavid Thesmar,one of the studys co-authors and a professor of financial economics at MIT Sloan. But given the severity of the recession, it remains that by all metrics, corporate financial distress is set to increase, he said.

Many companies entered 2020 already carrying a heavy debt load, and this put them at a great disadvantage when COVID-19 hit, Thesmar said.

By all metrics, corporate financial distress is set to increase.

Some firms should have disappeared as the natural result of competition forces, but most firms will be failing because they just have too much debt, some of it born in COVID-19, Thesmar said.

U.S. corporations owed $10.5 trillion to creditors earlier this year by one estimate, a figure 30 times higher than it was half a century ago. A few of those companies that carried significant debt include Hertz as well as Neiman Marcus and J. Crew, which filed for bankruptcy this year.

The researchers expect more to follow, with smaller firms at greater risk.

The reason: Bigger companies usually file for bankruptcy to restructure and settle on new repayment terms for their debts so they can remain open; small and medium-sized enterprises restructure very rarely.

This is especially worrisome as the balance sheets of small firms are hit the hardest by the current recession, the researchers wrote.

The authors warned that if historical trends repeat themselves, a massive number of bankruptcies is looming on the horizon. The courts will be stretched thin, and judge backlog will increase.

However, the authors suggested that the surge would be manageable: To keep the caseload to the level of the last crisis, in 2009, the authors estimated that the U.S. court system only needs an additional 250 more judges. Some retired judges could be recalled, they suggested.

If this is not done, courts will be crowded, and it will mostly hurt small firms. Thesmar said that as bankruptcy judges become busier, they tend to prioritize larger firms, making those more likely to be able to emerge from bankruptcy, whereas smaller firms are more likely be dismissed from court and left to liquidate without court protection.

The working paper presented a number of policy options that could help address some of the friction:

Despite the grim forecast, the current number of bankruptcies remains relatively low, with recent data indicating thatbankruptcy filings have slowed to a halt.

So far, there are very few failures, Thesmar said. Fewer than usual, actually.

Thesmar said that the CARES Act, the Paycheck Protection Program (PPP), the Main Street Lending Program, and the extension of unemployment insurance may have helped keep businesses afloat and out of bankruptcy. Economists have cited the benefits of these programs, noting that the PPP, for instance, provided much needed flexibility to small businesses by allowing them to apply for low-interest loans through their banks to cover some of their expenses. Unfortunately, the first round of federal loans allocated for small businesses didnt always reachthose who needed it most, other research showed.

Another round of assistance is necessary, Thesmar said. Without it, many businesses may have to close up shop.

Thesmar also said that while many companies have missed making their payments to creditors, theres been some evidence suggesting that lenders have been lenient, which has also helped companies avoid filing for bankruptcy. The authors cited a Census Small Business Pulse survey that showed that 11.5% of all small businesses had missed a loan payment by the first week of May, while 23.6% had missed other payments, such as rent.

If lenders have willing to be lenient, many firms that have missed payments may avoid bankruptcy, at least in the short run, the authors wrote. If these factors are only temporary, low bankruptcy numbers seen so far are a period of calm before the storm. On the other hand, if these factors actually prevent financial distress for many firms, our forecasted number of bankruptcies could be too high.

Going forward, Thesmar said that debt holders should be flexible with businesses to minimize the damage and give firms more time to come up with doable plans. Some economists have said that giving small businesses a little more flexibility can go a long way.

If a business is financially sound, debt holders should agree to reduce the amount owed, Thesmar said. Something is better than nothing. The risk is that too many viable firms go under, and they will only reemerge slowly and slow down the recovery.

The working paper, which was prepared for the Brookings Papers on Economic Activity, was co-authored by Robin Greenwood of the Harvard Business School and Benjamin Iverson of Brigham Young University-Provo.

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Yeah, We Can Take It – Texas Bankruptcy Court Defines the Scope of Its Post-Confirmation Jurisdiction – Lexology

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Executive Summary

A recent decision from the United States Bankruptcy Court for the Northern District of Texas, In re Care Ctrs., LLC, No. 18-33967, 2020 Bankr. LEXIS 3205 (Bankr. N.D. Tex. Nov. 12, 2020), examined (1) the scope of bankruptcy court subject-matter jurisdiction for post-confirmation actions filed in state court and removed to bankruptcy court; and (2) when the court must or should abstain and remand a proceeding back to the court where the action was originally brought.

The bankruptcy court held that it had subject matter jurisdiction in the current case, and that the well-pleaded complaint rule does not apply to actions that arise in a bankruptcy case pursuant to 28 U.S.C. 1334. In addition, the court concluded that it is not required to abstain from the action nor should it according to the doctrine of permissive abstention.

Background

Senior Care Centers, LLC (SCC) is a nursing home and senior care operator headquartered in Dallas, Texas. As part of its business, it leased and operated 11 properties from TXMS Real Estate Investments, Inc. (TXMS). The lease agreement (the Lease) between SCC and TXMS had a change of control provision permitting, if triggered, TXMS to terminate the Lease. Due to shifts in the industry and tightening terms with various creditors, SCC filed for bankruptcy protection in 2018.

SCCs reorganization plan (the Plan) provided for the restructuring of its business around a subset of its facilities. SCC assumed the Lease as part of the Plan. In addition, SCC would transfer all of its equity to a newly created entity called Abri Health Services, LLC (Abri). On the Effective Date of the Plan, 80% of the equity in Abri would be transferred into a Liquidating Plan Trust (the Trust) to pay unsecured creditors. The purpose of the Trust was to liquidate assets that could not be readily converted into cash. While TXMS raised an objection stating that the Lease should be amended to include Abri as party (now the owner of SCC), it did not raise any change of control issue.

At a status conference the day before the Plan went effective, the Unsecured Creditors Committee notified the court that it was in discussions to sell the equity in the Trust. A few weeks later, TXMS sent a letter to SCC and Abri (collectively the Debtors) indicating that any sale of the equity would violate the change of control provision and constitute an Event of Default. TXMS filed suit in Texas state court, seeking to enjoin the Debtors from taking any action that contravenes the change of control provision. The Debtors subsequently removed the action to bankruptcy court.

Subject Matter Jurisdiction

TXMS took the position that the bankruptcy court lacked subject matter jurisdiction because this action arose post-confirmation and the complaint is based on state law.

Supreme Court Travelers Test

The bankruptcy court first articulated the standard under Travelers Casualty & Surety Co. of America v. Bailey, where the Supreme Court held that a bankruptcy court plainly has jurisdiction to interpret and enforce its own prior orders, even decades after a plan is confirmed. The Court added that explicit retention of jurisdiction in the confirmation is further evidence that post-confirmation jurisdiction exists. 557 U.S. 137, 151 (2009).

In the current case, because the bankruptcy court explicitly retained exclusive jurisdiction over all matters arising out of, and related to the Chapter 11 Cases, including all matters relating to the assumption of unexpired lease, the court concluded that it had subject matter jurisdiction under the Travelers test.

Fifth Circuit U.S. Brass and Craigs Store Tests

The bankruptcy court then moved to Fifth Circuit cases, which interpret the scope of bankruptcy court post-confirmation jurisdiction more narrowly than in other Districts.

In re U.S. Brass Corporation used a four-factor standard to explain why it had jurisdiction: (1) while the plan had been substantially consummated, it had not been fully consummated; (2) there was a dispute over whether the relief requested was consistent with the plan or an improper modification of a substantially consummated plan and bankruptcy law would ultimately determine the dispute; (3) the outcome of the dispute could affect the parties post-confirmation rights and responsibilities; and (4) the proceeding would impact compliance with, or completion of, the plan. 301 F.3d 296, 305 (5th Cir. 2002). In addition, In re Craigs Stores of Texas limited the scope of its post-confirmation jurisdiction to matters that bear on the interpretation, implementation, or execution of the plan. 266 F.3d 388, 390-91 (5th Cir. 2001).

The bankruptcy court concluded that the current proceeding satisfies both tests. Like U.S. Brass, there is substantial consummation of the plan, but not full consummation, as the general unsecured creditors have not yet received distributions. Bankruptcy law will determine whether the Trust is allowed to liquidate the stock and distribute the proceeds. The bankruptcy court will have to look at the Plan and related orders entered during the bankruptcy case to resolve the issue. Finally, this proceeding will impact compliance with the Plan. As a result, the court concluded that this proceeding pertains to the Plans implementation or execution, satisfying the Craigs Stores test for post-confirmation jurisdiction as well.

Collateral Attack

The bankruptcy court then noted that the injunctive relief sought by TXMS is, in substance, a collateral attack on the confirmation order and the courts subject matter jurisdiction. The court cited In re Linn Energy, L.L.C., which held that final bankruptcy orders are res judicata to the parties as to any admissible matter which might have been offered to sustain or defeat a claim or demand. 927 F.3d 862, 867 (5th Cir. 2019) (quoting Travelers, 557 U.S. at 152). Because TXMS had a fair chance to challenge the relevant portion of the Plan that authorized the Trust to sell the stock and distribute the proceeds but failed to do so, the court held that TXMS cannot retroactively challenge the courts order through a collateral attack.

Well-Pleaded Complaint

The well-pleaded complaint rule requires that a federal question appear on the face of a well-pleaded complaint in order for a court to have federal question jurisdiction. TXMS argued that the Debtors cannot remove the case because there was no federal issue on the face of TXMSs complaint filed in state court. Fifth Circuit courts have held that the well-pleaded complaint doctrine only applies to federal question arising under jurisdiction. In re Brooks Mays Music Co., 363 B.R. 801, 807 (Bankr. N.D. Tex. 2007).

According to the bankruptcy court, bankruptcy court jurisdiction under 13341 extends further than the 28 U.S.C. 1331 federal question jurisdiction. While federal question jurisdiction applies to cases arising under a federal law, bankruptcy jurisdiction extends to matters arising under the bankruptcy code or arising in or related to a bankruptcy case. For reasons articulated below, the court held that this case arises in a bankruptcy case and is not based on arising under jurisdiction. Consequently, the court concluded that the well-pleaded complaint rule is not applicable here.

The bankruptcy court then held that when the well-pleaded complaint rule is inapplicable, the court may consider unfiled claims of a defendant, provided that they are not (1) immaterial; (2) made solely for the purpose of obtaining jurisdiction; or (3) wholly insubstantial and frivolous, to determine whether a bankruptcy court has jurisdiction over a removed action.

During the course of the proceeding, the Debtors made clear that it will file a declaratory judgment determining that the sale of Trust assets is allowed under the Plan and that TXMSs attempt to prevent the sale is an inappropriate, post-confirmation modification of the Plan. The bankruptcy court concluded that the Trusts claims are not immaterial, made solely for the purpose of obtaining jurisdiction, or wholly insubstantial and frivolous. Therefore, they are sufficient to give jurisdiction over this matter.

Abstention

TXMS argued, in the alternative, that even if the bankruptcy court has subject matter jurisdiction, it must abstain from adjudicating the case and remand the proceeding back to Texas state court.

Mandatory Abstention

The Fifth Circuit has articulated that mandatory abstention applies where: (1) the claim has no independent basis for federal jurisdiction, other than 1334; (2) the claim is not a core proceeding pursuant to 28 U.S.C. 157, i.e., it is not related to a case under the bankruptcy code; (3) an action has been commenced in state court; and (4) the action could be adjudicated timely in state court. In re Senior Care Centers, LLC, 611 B.R. 791, 800 (Bankr. N.D. Tex. 2019). According to U.S. Brass, a proceeding is core under 157 if it is invokes a substantial right provided by the bankruptcy code (arises under the bankruptcy code), or if it is a proceeding that, by its nature, could arise only in the context of a bankruptcy case (arises in a bankruptcy case). 301 F.3d at 304.

The bankruptcy court found that arising under jurisdiction does not exist here. According to the court, proceedings arise under the bankruptcy code when the section itself confers substantive rights to the party who is making the claim. Here, the court found that there is no bankruptcy code provision that confers substantive rights to either TXMS or the Debtors.

However, the court found that arising in jurisdiction does exist since TXMSs claims could only arise in the context of bankruptcy. More specifically, any action to enjoin Trust assets would be preempted by the confirmation order and TXMS would need to seek modification or clarification of that order in bankruptcy court. Consequently, the court held, this proceeding can be characterized as core and mandatory abstention is inappropriate.

Permissive Abstention

Explaining that permissive abstention may be appropriate even when the matter before the court is core, the bankruptcy court then analyzed whether it should remand the current case. The court enumerated 14 factors to consider in making this determination:

According to the bankruptcy court, these factors weighed heavily against permissive abstention. Determining whether the Trust may liquidate stock in the reorganized company requires interpretation of complex aspects of bankruptcy law, the Plan, and prior court orders. Because bankruptcy issues overwhelm state issues in this case, the court held that permissive abstention is not appropriate.

Conclusion

The bankruptcy court in In re Care Ctrs., LLC articulated a very broad view of post-confirmation bankruptcy court subject matter jurisdiction. Ultimately, it appears Fifth Circuit courts will have jurisdiction if the Plan has not been fully consummated, and adjudication of the dispute requires interpretation of bankruptcy law, the Plan, and prior bankruptcy court orders.

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Yeah, We Can Take It - Texas Bankruptcy Court Defines the Scope of Its Post-Confirmation Jurisdiction - Lexology

Should you close, sell or declare bankruptcy? What restaurants need to know. – Restaurant Dive

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The restaurant industry is set to end 2020 with more distressed businesses than it had during the Great Recession, according to an AlixPartners report. As of October, 50% of limited-service restaurants and 63% of full-service restaurants were distressed. Comparatively, at the end of the recession, 33% of LSRs and 17% of FSRs were at risk of not meaning their financial obligations.

"The industry has really taken a beating,"Edward Webb, advisory partner at BPM, said. BPM specializes in accounting, taxes and financing. "[For] independents, particularly the smaller independents, it's really been catastrophic."

Traffic in urban centers has largely disappeared, putting businesses that rely on heavy foot traffic in a difficult situation, Webb said.

Now, with PPP loans all but dried up, a new round of COVID-19 restaurant restrictions and little hope of federal aid until January, restaurant owners and operators face a grim outlook. Many will have to consider whether to close their operations for good.

Restaurant Dive spoke with Webb about what restaurant owners need to know when they consider their next steps whether that means closing down a business, declaring bankruptcy or seeking a sale.

Editor's note: This interview has been edited for clarity and brevity.

INDUSTRY DIVE: What would you tell an owner who might be considering a sale, bankruptcy or winding down operations?

EDWARD WEBB: There are a couple of pretty important steps that they need to go through. One is to make sure they have good, accurate financial information. If they haven't had a good bookkeeping function, or they haven't been able to use an outside accountant, then they need to make sure that their books are cleaned up. There is the immediate cash flow analysis. They need to understand where their cash is, what the demands are short- and medium-term, and then try to ascertain what their sources of cash are. And once that's done, and they've been able to determine how much time is realistically available to them, then they can look at their business model.

They need to ask, "Is the business model that they had previously been operating under effective now?"Assuming that it's not, and it's been negatively impacted by the pandemic, then will it return? Or is there some type of modification to the model that will enable them to become profitable again? And if the answer to that is no, then it really becomes an exercise of what the business owner is looking at. There's an end point to the business and the owner needs to understand how best to enter into that end point. Is it a simple wind down of operations? If there are a lot of creditors out there, if there are leases that are onerous, then that may require bankruptcy. It's driven by the owner's business decision. So they assess the cash, they look at the model, they determine what that next step is and then they figure out what we would call a harvest strategy.

What have been some of the common paths that business owners have been taking as their end strategies?

In situations where the owners can simply wind down, maybe they have a lease that they can get out of, or it's a lease without onerous terms and they're not personally guaranteeing it. If they're able to do that and liquidate their assets, utilize those funds, pay off whatever creditors they have, and basically walk away, that is far and away the easiest, quickest and cheapest path. They will likely need some type of accountant or business professional, and then they'll want a lawyer as well just to make sure that there's no backdoor that somebody can come in and cause problems.

Edward Webb, advisory partner at BPM

Permission granted by BPM

If there are significant liabilities attached, and they really believe they have to protect themselves in bankruptcy, that becomes an expensive and time-consuming process. They can expect it to be a 12- to 18-month process. It's unlikely fees will be less than a quarter of a million dollars and oftentimes more. You really only do bankruptcy in a situation where the personal effect of those liabilities is dramatic. So it's a clearly less-desirable choice.

One thing we haven't seen much of lately and I would expect that to change in 2021 is business combinations. In those situations where there's a healthy restaurateur, who sees an opportunity to either expand their operations or protect themselves in some way, maybe they can get a really advantageous deal. We haven't seen many of those primarily because everyone's afraid to move. Everybody's cautious. I would expect that will ease.

In terms of business combinations, what would an owner need to do to make sure they are getting a good deal and finding the right buyer?

If they have been dealing with an external accountant or some type of business manager, who they really like and they trust, that is really valuable. Ultimately, when you're going to bring two businesses together, there has to be the ability to kind of find that common language and bring the financial side of the businesses together effectively. Once a business owner has gotten their act together financially, and they know where they are, and they have a pretty good sense of where they're going, they can turn to a brokerage that can help restaurateurs find other restaurants or investors and assist them to sell the business. It can be expensive and sometimes you need to be pretty careful about the choices that you make with those folks.

Once you have that data, and it's solid, then you have the flexibility to approach the market. When the time comes to actually put the businesses together, you really do need a financial professional. That can be very difficult for a business owner to do because they have a day job of running the business. There are also potential tax implications, licensing and regulations that need to be looked out for, and so they're better served by making sure they got a pro.

What happens if an owner doesn't have the help of a financial professional for a business combination?

One outcome is there's no deal. The acquiring entity just couldn't figure out how to consume the other because they did not have accurate data and they weren't able to comfortably assume those operations. Then another scenario is the entity without good data can sometimes be taken advantage of and they will not be able to strike a good deal. The seller will find themselves in circumstances where the buyers will say, "Hey, we'll still take it off your hands, but we're gonna pay you less because we don't have this information now."That's pretty typical.

What should owners do to make sure the process goes smoothly?

If you have a case where there is a letter of intent, or some type of intent has been indicated, the buyer is going in to perform due diligence. At that moment, if the seller is fully prepared, if they have pulled their financial information together, they have cleaned up their inventory, they have identified their legal contracts, they are able to prove that they're current on taxes, they have their employee records in place, if all of those things are in order, then it obviously makes it a whole lot easier for the buyer coming in. And the buyers are typically going to be a little bit more sophisticated, because they're the buyers. Since they are able to afford it, they will have professionals of their own.

For example, we will do buy-side diligence on behalf of our clients. And when we go into circumstances where the seller is sophisticated and prepared for what's coming, then buy-side diligence can be very quick and relatively painless. Due diligence is never fun, but when a buyer comes in, and they encounter a seller who is ill-prepared to sell, the control of the negotiations subtly shifts to the buyer.

If the buyer and the seller are prepared, they come together and diligence is complete and everybody's satisfied. The nature of the restaurant business is very short cycles. So those tend to be very clean transactions. The issues are more readily identified, and once resolved, they are put to bed.

What do you anticipate we will see with business combinations going forward?

I believe there is going to be continued pressure, primarily by baby boomers who are reaching retirement age, for them to get out. And so they'll keep pushing on that. And if there are easy transitions that can be made with family members, friends, neighbors, anybody, they'll do those deals. I think that there probably, unfortunately, is going to be an increase in the number of distressed situations, in which there are trailing liabilities owners cannot get away from as the impact on real estate is felt more. The commercial real estate business has suffered maybe more than anything. But the banks aren't pushing it right now. They're not calling loans. They're not getting aggressive. When the banks have to begin doing that, then I think there'll be a trickle down effect, which may lead to increased distressed situations.

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Should you close, sell or declare bankruptcy? What restaurants need to know. - Restaurant Dive

Retail Bankruptcies in 2020: How the Fallout Will Play Out – Commercial Observer

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Its the perfect summation of 2020 to say that, in the commercial real estate industry, it was a much better year to be a bankruptcy lawyer than a retailer.

While a certain amount of retail bankruptcies is to be expected, especially over the past few years, as e-commerce has provided staunch competition for brick and mortar, the pace of this years retail bankruptcy news has been dizzying.

Neiman Marcus, JCPenney, Brooks Brothers, Lord & Taylor, CEC Entertainment (parent company of Chuck E. Cheese), Pier 1 Imports, Modells Sporting Goods, J.Crew, Century 21 Department Stores, Aldo, and Guitar Center are just a few of the many companies that filed for some form of bankruptcy in 2020.

The past 12 months have been a bloodbath, said James Famularo, president of Meridian Retail Leasing. [For brands like] Modells and True Religion, the writing was on the wall. But Neiman Marcus, J.Crew, Brooks Brothers these companies are iconic. Theyve been around for generations. Its mind-blowing.

Not all of the bankruptcies have been death knells. While some brands, like Lord & Taylor and Century 21, are gone for good, companies including Neiman Marcus, Brooks Brothers, and Ascena Retail (parent company of Ann Taylor and Lane Bryant), among others, will survive their filings, albeit with a smaller retail footprint.

While the COVID-19 pandemic certainly accounts for the sheer breadth of the list, its just one factor in many of the bankruptcies, and often, more of a final straw than a primary cause.

The fundamentals [for many of these companies] have been wrong for a long time, said Kate Newlin, CEO of Kate Newlin Consulting. I think if we didnt see [these bankruptcies] this year, we would have seen them next year. Theres nothing urgent that was driving people back into the mall. There was a systemic erosion underneath, and as long as they could mask some of that by selling things at discount, they could have skated for another year, maybe. But COVID was a hard stop. It was a fast-forward to the ultimate outcome, but it wasnt the only cause of it, certainly.

In many cases, the COVID-19 pandemic merely accelerated a process ignited years ago by online competition, or bad decisions, or by the takeover of some of these companies by private equity firms that demanded dividends and ladened the retailers with debt.

The headline is that its all about COVID, but there are enough examples of businesses that dont have something really distinguishing them. They just got to that endpoint a little bit quicker because of COVID, which maybe shaved off 18 months, said Soozan Baxter of Soozan Baxter Consulting.

Pier 1 is a brand that, quite honestly, couldnt keep up, she said. They got outsmarted by some of the innovation and creation from others in the business. Look at Target, and juxtapose that with the offerings at Pier 1. You can probably get everything that Pier 1 sells at a better price, and maybe with a brand. So, why do you need to go to Pier 1 anymore?

I wouldnt lay it all at the feet of COVID for Neiman Marcus, said Newlin. The Hudson Yards [store] was a catastrophe well before COVID. So, I think there were missteps along the way that COVID certainly made terminal more quickly.

The cumulative effects of these bankruptcies and other store closings found the national retail vacancy rate at 20 percent by mid-year, according to the National Association of Realtors, leaving a glut of space that could have effects beyond retail.

After Neiman Marcus closed its Hudson Yards store in July, co-developers Related Companies and Oxford Properties announced they would re-market the space for office use. While this is understandable, given the negative prognosis for retail, COVID-19 has made the fate of office tenuous, too. If developers attempt to convert retail space to office in larger numbers, that could merely spread the misery.

Thats an even bigger problem, said Jonathan Pasternak, a partner in the bankruptcy practice at Davidoff Hutcher & Citron, because not only do you have some retail vacancies, but you would end up potentially with a lot of office building vacancy. And thats where I think youre going to see the next trend in bankruptcy. Youve got owners in Midtown Manhattan, the Financial District, and in every city across the country, where people havent been going to their office and businesses have not been paying their full rents. Theres gotta be fallout to that.

And, while the retail bankruptcy trend overall is bound to have ramifications, some of the companies that filed for bankruptcy are significant enough to affect the retail landscape on their own.

With [a company like] GNC, their stores are little, only 1,000 to 1,500 feet, but theres 5,000 stores, David Firestein, managing partner at SCG Retail, said of the supplements retailer, which announced in June it would close almost 25 percent of its stores and revealed its sale to China-based Harbin Pharmaceutical Group in October. Its very impactful because its pushing so much space back into the market.

When you look at Ascena, and how many brands and how much square footage they have, that will probably take a dent out of some B malls, and definitely out of the outlet industry, said Baxter. Thats a meaningful company that just vanished.

Newlin believes the effect on malls will be more than just a dent.

Youll see [stores] like JCPenney get new ownership that will try to make it a legitimate shopping destination, Newlin said of the legendary retailer, which is exiting bankruptcy protection having sold the bulk of its assets to Simon Property Group and Brookfield Asset Management. But, essentially, without a powerful re-imagination of what it means to shop, its just the IV drip of the end of times for physical retail.

Across the board, the apparel sector has been one of the hardest hit by bankruptcies. Given the ease of shopping online for clothes, its hard to be optimistic about the sectors future.

The volume of clothing retailers that have gone into bankruptcy will really make surviving retailers apprehensive about opening new stores in the future, said Meridians Famularo. Most would probably opt for online sales, if not pop-ups. Were getting a lot more calls for pop-ups than normal.

Making the potential challenge even greater is that, pre-COVID, more experiential uses were an oft-discussed potential savior for flailing retail outlets. But entertainment of all forms has taken, perhaps, the hardest hit of the COVID era, as restaurants flail for survival and the major, movie theater chains facing both COVID fears and restrictions, and movies being released day and date on streaming services or video on-demand in response struggle to avoid their own bankruptcy filings.

Thats one looming out there that makes lots of people nervous, because they impact lots of other tenants, said Firestein. If a landlord gets back a J.Crew, its a clean box. Even a restaurant already has a lot of the restaurant-related work done. But theater space doesnt really work well for anybody else. To convert it is very expensive, because you have sloped floors and all kinds of stuff that doesnt work [for other businesses].

With all of the dire news and forecasts, there are some bright spots on the retail horizon. Baxter notes that athleisure and cosmetics are doing well, and the recent announcement that Harry Winston is nearly doubling its Fifth Avenue space demonstrates the staying power of jewelry sales.

Harry Winstons expansion really speaks to the category, the power of Fifth Avenue, and the belief that retail is going to come back, said Baxter.

Pasternak, meanwhile, sees the slew of bankruptcies as opportunities for right-sizing.

Bankruptcy gives these companies an opportunity to shed some leases, get leaner and meaner, and clean up their balance sheet, said Pasternak. I think these things are ultimately going to be good for the retail economy, because theyre going to lead to more efficiencies and a better chance of profitability of recovery for return on investment.

Baxter also sees an upside in the basic life cycle of business that, for every death, there can be a new birth.

A lot of these brands will go away, but every time you see a brand go away, imagine that theres probably 15 entrepreneurs sitting out there that are the next Jeff Bezos or Tory Burch, said Baxter. People are innovating all the time. For every brand that gets discussed in a oh my gosh, rest in peace sort of way, there are others coming up that are really exciting, and also brands changing the way theyre doing business.

Based on his deal volume throughout the pandemic, Famularo agreed, noting that one brands capitulation to inevitability is another brands golden opportunity.

New York will bounce back. Are we going to reach the same rent levels we were at a few years ago? I dont think thats going to happen in our lifetime, said Famularo. But my team and I have closed almost a hundred deals during the quarantine. People feel opportunistic. If you were paying $10,000 a month in whatever business you might have, and I offered [space] to you at $5,000, are you going to wait on the sidelines? Youll jump in head-first. Thats whats happening. Thats why Im saying were going to be back. I think come March, April or May, youll see the renaissance begin.

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Retail Bankruptcies in 2020: How the Fallout Will Play Out - Commercial Observer