The South Bay Law Firm Law Blog highlights developing trends in bankruptcy law and practice. Our aim is to provide general commentary on this evolving practice specialty.
 





 
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      Insolvency News and Analysis - Week of December 19, 2014
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    Insolvency News and Analysis – Week Ending September 19, 2014

    September 19th, 2014

    Seal of the United States Court of Appeals for...

     

    Claims

    Court Denies Administrative Priority Status to Seller Whose Goods Were Not Received by the Debtor

    Auction Design for Claims Trading

    Sales

    Purchasers at Bankruptcy Sales — They can’t be bad and expect to be protected as “good”

    Secured Claims and Credit

    Perfection and the New Jurisdiction-Hopping Corporations

    Mysteries Of The Uniform Commercial Code: Leases Of Goods That Become Installed In, Affixed To, Or Mixed With Other Goods

    Credit Bid: Loan-to-Own Strikes Out

    Credit Bid (Round 2): What Does It Take to Show “Cause”?

    A Refresher on Lender Liability

    Sales

    Weathering the Storm: Eleventh Circuit Vacates Four-Year-Old 363 Sale Order Based on Bad Faith Filing of an Involuntary Bankruptcy Case

    Confirmation

    The Role of Profit in Valuing Chapter 11 Cramdown Paper

    Momentous Decision in Momentive Performance Materials Part IV: Make-Wholes and Third Party Releases

    Intellectual Property

    The Messy Problem of IP Licensing During Bankruptcy

    Cross-Border

    PUSHING THE BORDERS OF CHAPTER 15: WHEN A FOREIGN REPRESENTATIVE “FLOUTS” THE PURPOSES OF CROSS-BORDER INSOLVENCY

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    Insolvency News and Analysis – Week Ending September 12, 2014

    September 12th, 2014

    English: Seal of the United States Court of Ap...

    Bankruptcy Legislation

    House Panel OKs Bankruptcy Path for Big Bank Failures

    DIP Lending

    The Fifth Circuit Narrowly Construes “Good Faith” in the Context of Lending to a Debtor

    Plan Confirmation

    Momentous Decision in Momentive Performance Materials: Cramdown of Secured Creditors – Part I

    Momentous Decision in Momentive Performance Materials: Cramdown of Secured Creditors – Part II

    Momentous Decision in Momentive Performance Materials: Subordination Is as Subordination Does

    Avoidance and Recoveries

    Only Debtor’s Intent Relevant in Fraudulent Conveyance Claim

    An Argument for Creating an Exception to Section 547 for Payments on Intraday Overdrafts

    DISTRICT COURT ADOPTS SUBJECTIVE GOOD FAITH DEFENSE FOR FRAUDULENT TRANSFER CLAIMS IN SIPA CASE

    Claims

    Post-Petition Interest: Not Very Predictable

    Publication Notice in The Wall Street Journal and the Orange County Register May Not Be Sufficient Notice to Unknown Creditors

    Intellectual Property

    A Closer Look At Recent Trends At The Intersection Of Intellectual Property And Bankruptcy Law

    Cross-Border

    Harmonizing Choice-of-Law Rules for International Insolvency Cases: Virtual Territoriality, Virtual Universalism, and the Problem of Local Interests

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    Insolvency News and Analysis – Week Ending September 5, 2014

    September 5th, 2014
    Delaware license plate from personal collection

    Delaware license plate from personal collection (Photo credit: Wikipedia)

     

     

     

     

     

     

     

    Trends

    [Bankruptcy Filings and] High Yield Debt

    Bankruptcies down in Delaware, US

    Corporate Governance

    LLC Managers Beware: Get Involved With Member Distributions By an Insolvent LLC and You May Be Personally Liable

    Financial Markets

    Rolling Back the Repo Safe Harbors

    Sales

    Eleventh Circuit Directs Bankruptcy Court to Vacate Sale Order Based on New Evidence that Involuntary Bankruptcy Case Was  Filed In Bad Faith

    Secured Claims

    The (Il)Legitimacy of Bankruptcies for the Benefit of Secured Creditors

    Avoidance and Recovery

    Caveat Debtor: Liens Preserved Pursuant to Section 551 Subject to Defects Under State Law

    The Uniform Voidable Transactions Act – New Section 11 and Series LLCs

    Fraudulent Transfer: A Case Where Strong Arm Powers Were “An Inch Too Short”

    Fifth Circuit Provides Valuable Guidance on Jurisdiction and Authority Post-Stern

    Confirmation

    S.D.N.Y. Bankruptcy Court Denies Claim for Make-Whole Premium and Allows Cram Down of Debtors’ Chapter 11 Plan Paying Secured Creditors Below-Market Interest Rates on Replacement Notes

     

    Bankruptcy Court Holds That Secured Creditors Can Be “Crammed Down” With Below-Market Rate Replacement Notes

    The Fourth Circuit Weighs in on Third-Party Releases in Plans of Reorganization

    Analysis Regarding Third-Party Releases in Bankruptcy

    Third Circuit Rules that Failure to Disclose Third-Party Release Proves Fatal

    Cross-Border

    Significant Changes To [Vietnamese] Bankruptcy Procedures

     

     

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    Insolvency News and Analysis – Week Ending August 29, 2014

    August 29th, 2014

     

    Seal of the United States Court of Appeals for...

    Seal of the United States Court of Appeals for the Second Circuit. (Photo credit: Wikipedia)

     

     

     

     

     

     

     

     

     

     

     

     

     

    Procedure

    What’s the Difference Between a Contested Matter and an Adversary Proceeding Anyway?

    Avoidance and Recovery

    Section 548(e) Authorizes Avoidance and Recovery of Transfer of Living Trust Assets

    Void and Voidable – A Distinction Without a Difference?

    SIPC v. Madoff Investment Securities LLC: Fraudulent Transfers between Foreign Parties Not Recoverable under Section 550(a)(2)

    Sales

    To (Credit) Bid Or Not To (Credit) Bid, That Is The Question

    Claims

    Failure to Provide a Translation Does not Translate to Victory

    Post-Petition Interest: Not Very Predictable

    Tax

    Be Careful What You Plan For in California: Bankruptcy Reorg Is Normal Course of Business

    Second Circuit’s Significant Decision Could Impact Liquidating Trustees

    Practice Pointers from the Second Circuit: A Prohibited Power Grab Can Be “Taxing”

     

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    Bankruptcy and Insolvency News and Analysis – Week Ending August 22, 2014

    August 22nd, 2014
    English: Charles Simms, March 17, 1796, Fire I...

    English: Charles Simms, March 17, 1796, Fire Insurance Policy (Photo credit: Wikipedia)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Practice and Procedure

    PROPOSED [BANKRUPTCY RULE] AMENDMENTS PUBLISHED FOR PUBLIC COMMENT

    DEALING WITH DIFFICULT DEBTORS

    Corporate Governance

    How Remote is Bankruptcy Remote? Is an Operating Agreement Restriction Against a Bankruptcy Filing Without the Unanimous Consent of All Members Enforceable?

    Let’s Call the Whole Thing Off: What Happens if the Bankruptcy Code Says Yes, But the Debtor’s Governance Documents Say No?

    Sales

    In re Ormet Corp: Delaware Bankruptcy Court Holds Section 363(f) Bars ERISA Successor Liability Claims

    Avoidance Actions and Other Recoveries

    Mind Your Ds and Os: Policy Language Proves Determinative in Director and Officer Insurance Coverage

    Klein v. King & King & Jones: Tenth Circuit Clarifies UFTA’s Good Faith and Subsequent Transferee Defenses

    Plan Confirmation Issues

    Fourth Circuit Issues Reminder to Plan Proponents: Evidentiary Support is Required for Non-Debtor Releases

     

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    Insolvency News and Analysis – Week Ending August 15, 2014

    August 15th, 2014
    (en) World Map (pt) Mapa Mundo (de) Weltkarte ...

    (en) World Map (pt) Mapa Mundo (de) Weltkarte (sv) Världskarta (Photo credit: Wikipedia)

     

     

     

     

     

     

     

     

     

     

     

    Statutory Construction

    Our “Must-Cite” Bankruptcy Cases

    Jurisdiction

    Still Trying To Close The Stern V. Marshall Can Of Worms

    The Ninth Circuit Waits for No One

    Cross-Border

    A Bird’s-Eye View of Chapter 15

    Chapter 15 Comes of Age

    Managing parallel proceedings – USA & Cayman Islands

    Sales

    Bankruptcy Sales and Leases: “Free And Clear” May Not Be So “Free And Clear”

    Sale of Assets Free and Clear Insulates Employee Claims Against Purchaser . . . Almost

    Section 363(f) Retires ERISA-Based Successor Liability Claims

    Avoidance and Recovery

    Trust Beneficiary Checkmated By Bankruptcy Code 548(e) In Castellano

    Property of the Estate

    Peering Through the Muck Again: Another Court Analyzes Whether LLC Operating Agreements are Property Interests or Executory Contracts

     

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    Paid in Full

    August 10th, 2014
    American National Bank AD

    American National Bank AD (Photo credit: Wikipedia)

    One of the fundamental functions of any bankruptcy proceeding is the establishment of an amount and priority for each creditor’s claim against the debtor. A short, 5-page decision issued late last month by the Nebraska Bankruptcy Court in two related Chapter 11 cases (Biovance and Julien) serves as a reminder that although creditors are not permitted a “double recovery” on their claims, they are nevertheless permitted to assert the full value of their claims until those claims are paid in full.

     
    In the US, it is common for creditors to mitigate credit risk through two primary means: Taking a security interest in the debtor’s collateral, and/or securing a guaranty of payment from a [non-debtor] third party. Further, and in the event of a payment default, courts frequently recognize a creditor’s right to pursue simultaneous collection activity for the entirety of the debt against the debtor, the collateral, and the guarantor. In a recent decision involving two related Chapter 11 debtors, a Nebraska Bankruptcy Court was asked by the debtors to limit the amounts claimed by a creditor as the creditor had already received a portion of the payments owed to it.

     
    In this case, a business debtor (Biovance) had leased equipment from American National Bank (ANB), collateralizing one of the leases with a certificate of deposit held by that debtor.  The other lease was protected by a guarantee issued by the individual debtor (Julien) to ANB.  ANB had obtained permission to collect its collateral with respect to the first lease, and to liquidate its claims in Nebraska state court with respect to the second (which claims were subsequently settled).  The debtors argued, among other things, that as the confirmed bankruptcy plan provided for payment in full of all claims, the creditor was therefore obligated to immediately credit the amounts it had received.  ANB argued that a proof of claim filed under 11 U.S.C. § 502 need not be reduced by amounts recovered from a third party unless it stood the chance of a double recovery.

     
    The Bankruptcy Court of Nebraska agreed with ANB, noting that the confirmed plan is neither a recovery nor payment in full. It is only a promise to pay. The Court went on to hold that until such time as ANB had actually received its payment in full, it was entitled to assert the balance due against all concerned parties – including the debtors.

     
    Establishing the amount and priority for each creditor’s claim against the debtor fixes the limit of recoveries available to a creditor from the debtor’s estate. Such claims are, in the aggregate, an important factor in the creditors’ assessment of the feasibility of a debtor’s proposed reorganization – and in determining whether liquidation offers them a preferable recovery.

     
    The Biovance decision, though not surprising, nevertheless reminds creditors and their counsel to preserve all of the value of their claims, even if paid partially, until the claims are paid in full.

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    Insolvency News and Analysis – Week Ending August 1, 2014

    August 1st, 2014
    Money 2014 ...item 3d.. State worker ordered t...

    Insolvency News and Analysis . . . and More

     

     

     

     

     

     

     

     

     

     

     

    Trends

    Highlights From 2014 (and Beyond)

    Disposition Firms Maximize Value by Leaving No Stone Unturned

    Mid-Year Chapter 11 Bankruptcy Update: From One Extreme To The Other

    Litigation

    A Dispute Over a Dispute: Recent Bankruptcy Court Decision Dismisses Involuntary Chapter 7 Petition Due to Bona Fide Disputes

    Claims, Creditors, and the Bankruptcy Estate

    A Spoonful of Sugar Helps the [UCC] Remedy Go Down: Recognition of Stoppage Rights in the Early Years of the Bankruptcy Code

    Decisions Do Not Apply “Jewel Doctrine” to Departed Partners’ Fees

    Avoidance and Recovery

    The Uniform Voidable Transactions Act – What’s With The Name Change?

    Strong Arm Powers: For Want of An “S” the Mortgage Was Lost

    Professional Lines Alert – Non-Fiduciary Held Liable for Aiding and Abetting Breach of Fiduciary Duty

    Not Fraudulent, Voidable

    Valuation

    In re Brown: Replacement Value Applies Even  When Debtor Surrenders Property

    Sales

    RECENT CHALLENGES TO CREDIT BIDDING—A NEW TREND?

    Sale “Free and Clear”: Adequate Protection of Nothing is Nothing

    Plan Confirmation

    Fourth Circuit Invalidates Third-Party Release Provision in Chapter 11 Plan

    CWCapital Asset Mgmt v. Burcam Capital II: Court Thwarts Debtor’s “Obvious Gerrymandering” to Obtain Plan Confirmation

    Release Me! Release Me!: S.D.N.Y Bankruptcy Court Upholds Certain Non-Consensual Non-Debtor Releases Granted by Unimpaired Creditors and Equity Holders

    Claims

    Make-Whole Provisions Continue to Cause Controversy: What You Can Do to Avoid Litigation

    Eleventh Circuit Extends FDCPA to the Filing of Bankruptcy Proofs of Claim

    Delaware Court Enforces Subordination Agreements Despite Senior Indenture Trustee’s Late Filing of Senior Claims

    The Interplay between Section 502(d) of the Bankruptcy Code and SIPA’s Requirement of “Prompt” Return of Customer Funds

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    Insolvency News and Analysis – July 18, 2014

    July 18th, 2014
    The bitcoin logo

    The bitcoin logo (Photo credit: Wikipedia)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Secured Claims

    In re 804 Congress: Fifth Circuit Affirms Section 506(b) Reasonableness Standard Applies to Oversecured Lender’s Legal Fees in Non-judicial Foreclosure Sale

    Environmental Claims

    The Pain that Comes along with Walking a Mile in Your Own Shoes … Circuits Refuse to Allow Reorganized Debtors to “Step in the Shoes” of Debtors in Possession as Subrogees

    Cross-Border

    American Exceptionalism and Extraterritorial Application of Bankruptcy Law

    What’s up in Australian insolvency law, and why should we care?

    Assets

    Bitcoin and Bankruptcy

    Could a Bitcoin Exchange Constitute a “Stockbroker”?

    Avoidance and Recovery

    The Collapse of Financial Fraud: Measuring Bankruptcy Avoidance Actions

    Confirmation

    Lender Beware: Ensure Plan Releases are Limited to Debtor’s Obligations

    Legislation

    HEARING: H.R. ____, THE “FINANCIAL INSTITUTION BANKRUPTCY ACT OF 2014

    GOP Lawmakers Seek to Amend Bankruptcy Rules for Big Bank Collapses

    Jurisdiction

    In Search of the Probate Exception

    Procedure

    Alarming Changes to Procedural Rules Proposed

    Related Articles

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    Insolvency News and Analysis – July 11, 2014

    July 11th, 2014

     

    Emblem of Hong Kong

    Emblem of Hong Kong (Photo credit: Wikipedia)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Trends

    Commercial Bankruptcy Filings Drop 22% for the First Half of 2014

    Secured Claims

    Small Formalities, Big Consequences in Secured Credit Law – An Update

    Cross-Border

    DLA Global Insight

    In re Octaviar: Minimal US Property Satisfies Chapter 15 Foreign Debtor Eligibility Requirements Imposed by Second Circuit

    Kazakhstan’s New Rehabilitation and Bankruptcy Law

    Chapter 11 again mooted as an option for Australia’s insolvency regime

    Workers’ rights key for legislators in weighing up Hong Kong bankruptcy bill

    Sales

    Rights of First Refusal in Bankruptcy Sales – Bankruptcy Court Finds Provision in Operating Agreement Unenforceable

    Avoidance and Other Recovery Sources

    Court Holds Professional Liability Insurance Covers Restitutionary Settlement

    Leases and Executory Contracts

    Leases and Executory Contracts in Chapter 11

    More:

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