Mr Mark A Cody

Mark A Cody


Insolvency & Restructuring

Bankruptcy blocking right in debtor's corporate charter violates federal public policy
USA | 13 November 2020

Courts sometimes disagree over whether provisions in a borrower's organisational documents designed to prevent it from filing for bankruptcy are enforceable as a matter of federal public policy or applicable state law. A handful of court rulings have addressed this issue in recent years, with mixed results. Most recently, the Delaware bankruptcy court overseeing the Chapter 11 cases of Pace Industries, LLC and affiliates denied on public policy grounds a motion to dismiss the cases filed by a preferred stockholder.