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October 12, 2020

Ultra Petroleum and the Issue of Impairment Under the Bankruptcy Code — The Fifth Circuit’s Analysis Doesn’t Cut It

James Millar authored an article for the 2020 edition of the Norton Annual Survey of Bankruptcy Law titled “Ultra Petroleum and the Issue of Impairment Under the Bankruptcy Code —  The Fifth Circuit’s Analysis Doesn’t Cut It.”

A claim is “impaired” under the Bankruptcy Code if the holder of the claim is not getting everything to which it is entitled. Whether or not a claim is impaired is significant. A holder of a claim in an impaired class has the right to vote for or against a Chapter 11 plan, whereas a holder in an unimpaired class is deemed to accept the plan. In addition, an impaired claimholder that votes “no” on a plan has the right to object to the plan based on the best interests of creditors test, which requires that the claimant receive at least as much as it would receive in a Chapter 7 case. An unimpaired claimant cannot bring such an objection.

In his article, Jim reviews the Fifth Circuit’s decision on impairment in In re Ultra Petroleum Corp. and why he believes the Fifth Circuit missed the mark.

Reprinted from Norton Annual Survey of Bankruptcy Law, 2020 Ed. with permission of Thomson Reuters. Copyright © 2020. Further use without the permission of Thomson Reuters is prohibited. For further information about this publication, please visit https://legal.thomsonreuters.com/en/products/law-books or call 800.328.9352.

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