On November 17, 2016, the Third Circuit Court of Appeals issued a highly anticipated ruling in the chapter 11 reorganization of Energy Future Holdings Corp. ("EFH"), invalidating one of the aspects of EFH’s confirmed chapter 11 plan. InDel. Tr. Co. v. Energy Future Intermediate Holding Co. LLC (In re Energy Future Holdings Corp.), 842 F.3d 247 (3d Cir. 2016), a three-judge panel of the Third Circuit reversed lower court rulings disallowing the claims of EFH’s noteholders for hundreds of millions of dollars in make-whole premiums allegedly due under their indentures.
In its highly anticipated Marblegate Asset Management LLC v. Education Management Corp. decision,[1] the U.S.
In 1994, Congress amended the Bankruptcy Code to add section 1123(d), which provides that, if a chapter 11 plan proposes to "cure" a default under a contract, the cure amount must be determined in accordance with the underlying agreement and applicable nonbankruptcy law. Since then, a substantial majority of courts, including the U.S. Court of Appeals for the Eleventh Circuit, have held that such a cure amount must include any default-rate interest required under either the contract or applicable nonbankruptcy law. See, e.g., JPMCC 2006-LDP7 Miami Beach Lodging, LLC v.
On November 17, 2016, the Third Circuit Court of Appeals issued a highly-anticipated ruling in the chapter 11 reorganization of Energy Future Holdings Corp. ("EFH") invalidating one of the aspects of EFH's confirmed chapter 11 plan. In Del. Tr. Co. v. Energy Future Intermediate Holding Co. LLC, the Third Circuit reversed lower court rulings disallowing the claims of EFH's noteholders for make-whole premiums allegedly due under their indentures.
Secured lenders have welcomed a ruling recently handed down by the U.S. Bankruptcy Court for the Southern District of New York in the chapter 11 cases of Aéropostale, Inc. and its affiliates (collectively, "Aéropostale"). In In re Aéropostale, Inc., 2016 BL 279439 (Bankr. S.D.N.Y. Aug. 26, 2016), Bankruptcy Judge Sean H.
On July 26, 2016, a three-judge panel of the U.S. Court of Appeals for the Seventh Circuit ruled that the Bankruptcy Code section 546(e) "safe harbor" applicable to constructive fraudulent transfers that are settlement payments made in connection with securities contracts does not protect "transfers that are simply conducted through financial institutions (or the other entities named in section 546(e)), where the entity is neither the debtor nor the transferee but only the conduit."FTI Consulting, Inc. v. Merit Management Group, LP, 2016 BL 243677.
On November 7, 2014, Judge Steven Rhodes, the judge presiding over the City of Detroit's bankruptcy case, announced that he would confirm the City's proposed Plan of Adjustment (the "Plan"), including the creditor settlements contained within that Plan. A more detailed written opinion will follow, but the opinion read from the bench on November 7, together with an earlier opinion in this case, are among the most important precedents in U.S. municipal bankruptcy law.
On November 17, 2016, the Third Circuit Court of Appeals issued a highly anticipated ruling in the chapter 11 reorganization of Energy Future Holdings Corp. ("EFH"), invalidating one of the aspects of EFH’s confirmed chapter 11 plan. InDel. Tr. Co. v. Energy Future Intermediate Holding Co. LLC (In re Energy Future Holdings Corp.), 842 F.3d 247 (3d Cir. 2016), a three-judge panel of the Third Circuit reversed lower court rulings disallowing the claims of EFH’s noteholders for hundreds of millions of dollars in make-whole premiums allegedly due under their indentures.
The United States Bankruptcy Court for the Southern District of New York has ruled that a creditor or trustee seeking to recover a subsequent transfer under Section 550(a) of the Bankruptcy Code need not obtain a judgment of avoidance against the subsequent transferee before proceeding with the recovery action.
In Short
The Situation: Courts have disagreed over whether a make-whole premium triggered by a borrower's bankruptcy filing must be disallowed as unmatured interest. They have also disputed whether the "solvent-debtor exception" requiring the payment of postpetition interest to unimpaired unsecured creditors of a solvent debtor survived the enactment of the Bankruptcy Code. Finally, courts have split on what rate of postpetition interest unimpaired unsecured creditors of a solvent debtor are entitled to receive.