Schulte Roth & Zabel partner Eleazer Klein discusses the recent tweets from Elon Musk that may have implicated the nondisparagement clause of his purchase agreement for Twitter with The Guardian. “The fact that he would be vocal about his beliefs cannot come as a surprise to the company or be unanticipated. You would imagine that they will be thoughtful about what is really an issue in this case for the deal moving forward,” said Ele Klein. Read the article here: https://bit.ly/3Kn3FSA

A Chapter 11 debtor’s “rejection [(under Bankruptcy Code (Code) §365(a)] of a filed-rate [natural gas] contract…relieve[d] it of the obligation to continue performance absent the approval of FERC [(the Federal Energy Regulatory Commission],” held the U.S. Court of Appeals for the Fifth Circuit on March 14, 2022. In re Ultra Petroleum Corp., 2022 WL 763836, *1 (5th Cir. Mar 14, 2022). Moreover, held the court in affirming the bankruptcy court on a direct appeal, Code §1129(a)(6) did not “require the bankruptcy court to seek FERC’s approval before it confirmed [the debtor’s] reorganization plan.” Ultra followed, as expected, the reasoning of its precedent, In re Mirant Corp., 378 F.3d 511 (5th Cir. 2004), and, more important, carefully balanced the power of FERC and the nation’s bankruptcy courts.

A bankruptcy court gave “unnecessary and likely incorrect” reasoning to support its “excessively broad proposition that sales free and clear under [Bankruptcy Code (“Code”)] Section 363 override, and essentially render nugatory, the critical lessee protections against a debtor-lessor under [Code] 365(h),” said the U.S. Court of Appeals for the Fifth Circuit on Feb. 16, 2022. In re Royal Bistro, LLC, 2022 WL 499938, *1-*2 (5th Cir. Feb. 16, 2022). The court still denied the lessees’ “motion for a writ of mandamus” for a “stay pending appeal” from a bankruptcy court order authorizing the trustee’s sale of “the debtor’s real property…free and clear” of the lessees’ interests. Id. at *1. In essence, though, the Fifth Circuit signaled that it would not approve in later cases a bankruptcy court asset sale of real property that summarily cuts off the rights of the debtor’s lessees.

“Disparagement is in the eye of the beholder,” said SRZ partner Eleazer Klein in this morning’s “DealBook” newsletter from The New York Times regarding the rules surrounding Elon Musk’s takeover of Twitter. “If someone goes to court, what are they going to do? Terminate the agreement?” Read the fourth newsletter story, “What Twitter’s deal documents tell us”: https://nyti.ms/3kfzHFC