Recent Developments in Bankruptcy and Restructuring Law: Marijuana and Safe Harbors

Although more and more states have legalized the medical or recreational use of marijuana, marijuana remains strictly illegal under federal law. As a result, individuals and entities that are involved (however tangentially) in the growing and distribution of marijuana as part of a business are generally barred from seeking relief in the federal bankruptcy court. This program, presented by Michael Riela and Richard Trotter of Tannenbaum Helpern, will discuss the relevant federal law with respect to marijuana, and alternative avenues that individuals and distressed companies in the marijuana business might be able to pursue to restructure their debts or liquidate their assets.

The Bankruptcy Code provides a "safe harbor" against preference and certain fraudulent transfer "clawback" actions, which have been relied upon by certain types of creditors for many years. However, in its Merit Management Group, LP v. FTI Consulting, Inc. decision earlier this year, the Supreme Court substantially narrowed the scope of the safe harbor. This course will examine the Supreme Court's decision and its future implications.


Learning Objectives:

1. Examine the status of federal law with respect to marijuana
2. Explore debt restructuring and asset liquidation alternatives to bankruptcy for individuals and distressed companies that are involved in the marijuana business
3. Analyze the Bankruptcy Code's "safe harbor" from preference and certain fraudulent transfer avoidance actions, and explore the Supreme Court's decision in Merit Management Group, LP v. FTI Consulting, Inc. that limited that safe harbor