Global Insolvency | Daily News Headlines on Insolvency Developments across the Globe

Defense of imputation of an agent’s bad conduct to its principal clarified in Pennsylvania; independent auditor at risk for $1 billion in damages

2010-09-13

Official Committee of Unsecured Creditors of Allegheny Health, Education and Research Foundation v PricewaterhouseCoopers, LLP(3d Cir No 07-1397, May 28, 2010)

CASE SNAPSHOT

Filed under:

USA, Pennsylvania, Insolvency & Restructuring, Litigation, Non-profit Organizations, Professional Negligence, Reed Smith LLP, Breach of contract, Fraud, Fiduciary, Audit, Negligence, Remand (court procedure), Collusion, Chief financial officer, Pennsylvania Supreme Court

Authors:

Ann E. Pille

Location:

USA

Firm:

Reed Smith LLP

Sellers beware - unauthorized payments from ‘cash collateral’ will be avoided

2010-09-13

Suppliers to chapter 11 debtors-in-possession should always ensure that they are not being paid from the debtor’s “cash collateral” without court approval. Marathon Petroleum Company supplied products to debtor Delco Oil in the ordinary course of its business during the bankruptcy case, but was forced to return all of the postpetition payments it received from Delco, pursuant to section 549 of the Bankruptcy Code. Marathon was required to return these payments because they were deemed part of the cash collateral that was secured by Delco’s pre-petition creditor, CapitalSource Finance.

Filed under:

USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor, Collateral (finance), Secured loan, Title 11 of the US Code, Uniform Commercial Code (USA), Trustee, United States bankruptcy court

Authors:

Christopher O. Rivas

Location:

USA

Firm:

Reed Smith LLP

An LLC member/manager is an ‘insider,’ so that payments are preferential transfers subject to avoidance up to one year prior to bankruptcy filing

2010-09-13

Longview Aluminum, LLC v Brandt (In re Longview Aluminum, LLC), 2010 WL 2635787 (ND Ill, June 28, 2010)

CASE SNAPSHOT

Filed under:

USA, Illinois, Company & Commercial, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor, Board of directors, Limited liability company, Consent, Title 11 of the US Code, Trustee, United States bankruptcy court, Seventh Circuit

Authors:

Location:

Firm:

2010-09-13

In this edition of the Landlord’s Corner, we review various cases that address the (i) rights of landlords to recover their property post-rejection, (ii) whether payments pursuant to a termination of lease agreement constitute preferential transfers and (iii) whether a lease could be retroactively rejected in the absence of a formal motion to reject.

Filed under:

USA, Insolvency & Restructuring, Litigation, Real Estate, Reed Smith LLP, Bankruptcy, Debtor, Landlord, Westlaw, Title 11 of the US Code, Trustee, United States bankruptcy court, First Circuit

Authors:

Derek J. Baker

Location:

USA

Firm:

Reed Smith LLP

Court breaks from majority rule, granting retirees post-petition rights greater than pre-petition rights

2010-09-13

IUE-CWA v Visteon Corporation, 2010 WL 2735715 (3rd Cir July 13, 2010)

CASE SNAPSHOT

Filed under:

USA, Employee Benefits & Pensions, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor, Life insurance, Good faith, Collective bargaining agreements, Majority opinion, US Congress, Communications Workers of America, Trustee, Second Circuit, United States bankruptcy court, Third Circuit

Authors:

Christopher O. Rivas

Location:

USA

Firm:

Reed Smith LLP

Broader economic woes may have played a part in the court’s decision to dismiss allegations of lender overreaching

2010-09-13

American Consolidated Transportation Companies, Inc v RBS Citizens NA (In re American Consolidated Transportation Companies, Inc), Adversary No 10-00154, Bankruptcy No 09-26062 (Bankr ND Ill July 13, 2010)

CASE SNAPSHOT

Filed under:

USA, Illinois, Banking, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Letter of credit, Credit (finance), Debtor, Interest, Swap (finance), Liquidation, Good faith, Cashflow, Default (finance), Secured loan, The Royal Bank of Scotland, United States bankruptcy court

Authors:

Brian M. Schenker

Location:

USA

Firm:

Reed Smith LLP

Risk losing your first priority lien if you provide superfluous information in the UCC financing statement

2010-09-13

In re EDM Corporation, 2010 WL 1929772 (8th Cir BAP May 14, 2010)

CASE SNAPSHOT

Filed under:

USA, Banking, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Collateral (finance), Safe harbor (law), Uniform Commercial Code (USA), Bankruptcy Appellate Panel

Authors:

Cory Falgowski

Location:

USA

Firm:

Reed Smith LLP

Sanctions awarded under the bankruptcy court’s ‘inherent authority’

2010-09-13

In re 15375 Memorial Corporation, et al, 430 BR 142 (Bankr D Del May 17, 2010)

CASE SNAPSHOT

Filed under:

USA, Delaware, Energy & Natural Resources, Environment & Climate Change, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Costs in English law, Debtor, Discovery, Legal burden of proof, Holding company, Involuntary dismissal, Line of credit, United States bankruptcy court, Third Circuit

Authors:

Ann E. Pille

Location:

USA

Firm:

Reed Smith LLP

Texas district court affirms the contractual default interest rate where the debtor is solvent

2010-09-13

Good v RMR Investments, Inc, 428 BR 249 (ED Texas, March 31, 2010)

CASE SNAPSHOT

A secured creditor in a chapter 11 case objected to the confirmation of the reorganization plan of the debtor, arguing that the proper “cramdown” interest rate (court-modified rate) was the pre-petition contractual default rate, rather than the significantly lower cramdown rate. After the debtor appealed, the District Court affirmed, holding that utilizing the contract rate of interest was appropriate because the debtor was solvent.

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