The Restructuring Report

Recent decisions in the Third Circuit, Fourth Circuit and Indiana bankruptcy court appear to implement an insolvency prerequisite for a debtor to commence a case under the Bankruptcy Code. What is the basis of the insolvency prerequisite and how will courts implement this prerequisite in the future?

When drafting a pleading, it is important to remember the applicable burden of proof and which party bears that burden. This is even more important in bankruptcy proceedings, as multiple provisions of the Bankruptcy Rules and Bankruptcy Code shift the burden of proof between parties.