The influential Delaware bankruptcy court issued a recent decision that all secured lenders need to be aware of. In this decision, the bankruptcy court held that the fees of the official creditors’ committee were not limited by the dollar-amount cap in the financing order because the debtors confirmed their chapter 11 plan. The creditors’ committee argued that it was entitled to over $8 million in fees while the secured lender asserted that the committee’s fees were capped at $250,000 due to what the bankruptcy court referred to as a “standard carve-out provision” in the financing order.

Sleep better at night knowing that the loan you made to your borrower is supported by collateral from the borrower’s subsidiaries? You may want to keep one eye open. On May 15, 2012, the U.S. Court of Appeals for the Eleventh Circuit upheld a bankruptcy court opinion that reinforces lender liability for fraudulent transfers in subsidiary-supported loans. The Eleventh Circuit upheld the opinion of the U.S. Bankruptcy Court for the Southern District of Florida in In re TOUSA, Inc., and overruled a contrary opinion by the U.S. District Court.