In its recent decision, Executive Benefits Insurance Agency v. Arkison (In re Bellingham Insurance Agency, Inc.),1 the Supreme Court reiterated and expanded on the reasoning in Stern v.
In another judicial decision springing from Lehman Brothers, as a result of the likely surplus in the estate of Lehman Brothers International (Europe) (in administration) (LBIE) after all the provable debts have been paid, Mr Justice Richards has issued a ‘statement of conclusions’ in what is called the Waterfall Application. A more detailed judgement is expected in late March 2014. We summarise the conclusions below.
Ranking and Contributions of Shareholders of Inlimited Companies
The Third Circuit in In re KB Toys, Inc.1 recently affirmed a decision of the Delaware District Court, holding that trade claims are subject to disallowance under section 502(d) of the Bankruptcy Code despite their subsequent sale to a third party. This case is of particular interest to investors in distressed debt.
In another recent private letter ruling,19 the IRS ruled that an ownership change pursuant to a bankruptcy reorganization plan qualified for an exception to the general rule limiting net operating loss ("NOL") carryforwards under Section 382(a).
On April 9, 2013, Ambac Financial Group, Inc. (“Ambac”) submitted a proposed settlement with the United States to the U.S. Bankruptcy Court for the Southern District of New York. If approved, the proposed settlement would resolve more than two years of litigation concerning the tax treatment of losses sustained by Ambac in connection with credit default swap contracts entered into during the 2008 financial crisis. The settlement would result in a payment by Ambac to the Government of $101.9 million, as well as possible future additional payments of up to $14.9 million.
On May 29, 2012, the United States Supreme Court resolved a split among the federal courts of appeals on an important bankruptcy issue, agreeing with arguments Morrison & Foerster advanced on behalf of Amalgamated Bank. In a unanimous opinion in RadLAX Gateway Hotel, LLC v. Amalgamated Bank,1 the Court held that a Chapter 11 plan of reorganization that provides for a sale of a secured creditor’s collateral free and clear of liens must afford that secured creditor the right to credit bid.
A New York State Administrative Law Judge has denied an application for costs and fees filed by a petitioner who had succeeded in substantially reducing the asserted tax liability through settlement. Matter of Frank M. Grillo, DTA No. 823237 (N.Y.S. Div. of Tax App., Nov. 3, 2011). The decision turned on whether the position of the Department of Taxation and Finance was substantially justified, and that, in turn, depended upon whether the Department had used the correct address when it sent the Notice of Determination to the petitioner.
On September 7, 2011, the FDIC announced the launch of a new initiative aimed at encouraging small investors and asset managers to partner with larger investors to participate in the FDIC’s structured transaction sales of assets from failed institutions.
Pursuant to Section 113 of Dodd- Frank aimed at avoiding a repeat of the Lehman Brothers collapse in September 2008, the Federal Stability Oversight Council (“FSOC”) issued a proposed rule establishing a three-stage analysis for identifying non bank systemically important financial institutions.
The Federal Reserve announced the approval of a final rule to implement the Dodd-Frank resolution plan requirement set forth in Section 165(d) (the “Final Rule”). The Final Rule requires bank holding companies with assets of $50 billion or more and nonbank financial firms designated by the Financial Stability Oversight Council to annually submit resolution plans to the Federal Reserve and the FDIC.