In Rejecting J&J Bankruptcy Petition, Court Reminds that Financial Distress is a Prerequisite to Bankruptcy – Update from Manko Gold Katcher Fox

February 16, 2023

Brandon P. Matsnev, Esq.

MGKF Litigation Blog

In In re LTL Management, LLC, No. 22-2003 (Jan. 30, 2023), the U.S. Court of Appeals for the Third Circuit had occasion to consider whether an entity that was created solely to house liabilities and file for bankruptcy could, in fact, file for bankruptcy where another entity was contractually obligated to pay those liabilities. The Court dismissed the bankruptcy petition, reasoning that this contractual obligation meant the former entity was not in financial distress and thus could not avail itself of the bankruptcy process.  

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