Bankruptcy Code Good Faith Standard: Practical Applications

This CLE webinar will provide a comprehensive overview of when the standard of good faith applies in both business and individual bankruptcy and how courts are articulating what good faith means in various contexts. The program will discuss the many different bankruptcy choices that must be made in good faith beyond the filing of the petition and recent decisions that have found a lack of good faith. The speakers will conclude with practical guidance about when and how to assert or challenge the good faith of bankruptcy actions and choices.

In re LTL Mgmt. LLC, 64 F.4th 84 (3d Cir. 2023), reinvigorated the principle of "good faith" in bankruptcy, and subsequent cases have expanded the understanding of good or bad faith in the context of filing petitions. Many other choices in bankruptcy will also not be honored or can be undone if not made in good faith: conversion to another case; structuring plans; soliciting votes; voting on acceptance or rejection; confirmation; and obtaining or retaining the benefit of the automatic stay. LTL has emboldened stakeholders to challenge the good faith of more decisions in business and individual cases, resulting in more opinions about what good or bad faith is in various contexts. 

Trustees and counterparties are specifically required to negotiate certain disputes in good faith. Good faith can also be a shield or a defense against avoidance actions, turnover, and similar actions. Actions taken in "good faith" after bankruptcy court authorization that is modified or reversed do not have to be undone. The Bankruptcy Code will also excuse the debtor's technical compliance issues with certain reporting or other requirements where the debtor has attempted in good faith to comply. 

Listen as this panel of prominent speakers discusses when the standard of good faith applies in bankruptcy, what constitutes good or bad faith, and the type of evidence needed to prove good or bad faith.