When handling bankruptcy matters, lawyers must take care to reserve claims their clients want to pursue after a court confirms a Chapter 11 plan of reorganization. While it still is not completely clear what language attorneys must include in the reorganization plan or the disclosure statement to preserve these claims, the 5th U.S. Circuit Court of Appeals recently has clarified the law on point.
A debtor-in-possession in a Chapter 11 bankruptcy case, while continuing to operate its business and manage its assets, is vested with most of the powers of a bankruptcy trustee. This includes the power to pursue claims belonging to the bankruptcy estate, including both avoidance actions under the Bankruptcy Code and non-bankruptcy causes of action under state law.
