The Bankruptcy Appellate Panel for the Sixth Circuit (BAP) recently held that a mortgagee that held a collateral assignment of rents on property in which the debtor had no equity was not adequately protected by cash collateral orders entered by the bankruptcy court that granted the lender a "replacement lien" on post-petition rents.
In a recent decision arising out of the Chapter 11 bankruptcy case of Global Industrial Technologies, Inc. (GIT),1 the U.S. Court of Appeals for the Third Circuit, sitting en banc, held that insurance companies that had issued liability insurance policies to a manufacturer before its bankruptcy filing had standing to object to confirmation of the company’s Chapter 11 plan of reorganization, even though the plan had been designed to be “insurance neutral” with regard to the policies.
Chapter 15 of the Bankruptcy Code provides mechanisms for dealing with cases of cross-border insolvency. On Oct. 6, 2014, the U.S. Supreme Court, in Jaffé v. Samsung Electronics Co., Ltd., denied review of a decision of the U.S. Court of Appeals for the Fourth Circuit, upholding a bankruptcy court’s determination that a foreign debtor in a Chapter 15 case could not terminate its intellectual property licenses under German law, where such action would deprive the licensees of the debtor’s U.S.
In an important recent decision, United States v. Quality Stores, Inc., et al.,1 in which Pepper represented the prevailing party, the U.S. Court of Appeals for the Sixth Circuit held that supplemental unemployment compensation benefits (SUB payments) paid by a bankrupt company to its former employees were not wages subject to taxation under the Federal Insurance Contributions Act (FICA).
In In reAm. Capital Equip., LLC1 the Third Circuit addressed the issue of whether a bankruptcy court has the authority to determine at the disclosure statement stage that a Chapter 11 plan is unconfirmable without holding a confirmation hearing. The court held that when a plan is patently unconfirmable, so that no dispute of material fact remains and defects cannot be cured by creditor voting, a bankruptcy court is authorized to convert the case to Chapter 7 without holding a confirmation hearing. Am.
In a unanimous decision, the U.S. Supreme Court held that debtors may not obtain confirmation of a Chapter 11 cramdown plan that provides for the sale of collateral free and clear of a creditor’s lien but does not permit the creditor to credit-bid at the sale. InRadlax Gateway Hotel, LLC et al. v.
The United States Court of Appeals for the Third Circuit recently issued an important decision on the valuation of collateral of secured creditors and “lien-stripping” in Chapter 11 cases. In In re Heritage Highgate, Inc.,1 the court held that in a Chapter 11 case, the value of a secured creditor’s collateral under §506(a) of the Bankruptcy Code2 was the fair market value of the property as established by expert testimony and it was permissible to “strip the lien” of the creditor where it was unsupported by collateral value.
The United States Supreme Court recently ruled in Stern v. Marshall1 that a bankruptcy court lacks constitutional authority to render a final judgment on a bankruptcy estate’s counterclaim against a creditor based on state common law, despite an express statutory grant of jurisdiction. This ruling is the most significant decision regarding bankruptcy court jurisdiction since the Court’s 1982 decision in Northern Pipeline v. Marathon2 and it could significantly affect the administration of bankruptcy cases.
Root of the Constitutional Problem
The United States Court of Appeals for the Third Circuit recently issued an important decision on the valuation of collateral of secured creditors and “lien-stripping” in Chapter 11 cases. In In re Heritage Highgate, Inc.,1 the court held that in a Chapter 11 case, the value of a secured creditor’s collateral under §506(a) of the Bankruptcy Code2 was the fair market value of the property as established by expert testimony and it was permissible to “strip the lien” of the creditor where it was unsupported by collateral value.
In a unanimous decision, the U.S. Supreme Court held that debtors may not obtain confirmation of a Chapter 11 cramdown plan that provides for the sale of collateral free and clear of a creditor’s lien but does not permit the creditor to credit-bid at the sale. InRadlax Gateway Hotel, LLC et al. v.