Funds ‘earmarked’ for bondholders not property of the estate and not subject to avoidance

Cooper v Centar Investments LTD, et al. (In re Trigem America Corporation), 431 B.R. 855 (C.D. Cal. 2010)

CASE SNAPSHOT

Filed under:
USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bond (finance), Debtor, Fraud, Accounts receivable, Interest, Swap (finance), Stock exchange, Convertible bonds, Ninth Circuit
Authors:
Christopher O. Rivas
Location:
USA
Firm:
Reed Smith LLP
Creditors of insolvent subsidiaries may bring derivative actions against parent company’s officers and directors for breach of fiduciary duties

Official Committee of Unsecured Creditors of TOUSA, Inc. v. Technical Olympic, S.A. (In re TOUSA, Inc.), 2010 WL 3835829 (Bankr. S.D. Fla. 2010)

CASE SNAPSHOT

Filed under:
USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Shareholder, Unsecured debt, Security (finance), Breach of contract, Fiduciary, Board of directors, Debt, Standing (law), Involuntary dismissal, Stakeholder (corporate), Business judgement rule, Subsidiary, Parent company, United States bankruptcy court
Authors:
Brian M. Schenker
Location:
USA
Firm:
Reed Smith LLP
Bankruptcy court (mostly) dismisses complaint against pre-petition lenders based on alleged inequitable conduct

Official Committee of Unsecured Creditors v Credit Suisse (In re Champion Enterprises, Inc.), 2010 WL 3522132 (Bankr. D. Del. 2010)

CASE SNAPSHOT

Filed under:
USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Contractual term, Bankruptcy, Credit (finance), Unsecured debt, Breach of contract, Debt, Estoppel, Unjust enrichment, Default (finance), Line of credit, Credit Suisse, Title 11 of the US Code, United States bankruptcy court
Authors:
Aaron B. Chapin
Location:
USA
Firm:
Reed Smith LLP
Swaps

We are seeing more and more challenges by borrowers to swaps. No big surprise since, with falling interest rates over the past few years, the borrowers are on the wrong end of the transactions. Although swaps are considered independent of the loans, they are often secured by the same collateral and are usually crossdefaulted with the loans, so the obligations that arise from early termination (which can be significant) become part of the collection process and are being fought vigorously by borrowers.

Filed under:
USA, Banking, Derivatives, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Collateral (finance), Limited liability company, Swap (finance), Mortgage loan, Foreclosure, Secured loan
Authors:
Peter S. Clark, II
Location:
USA
Firm:
Reed Smith LLP
Delaware Bankruptcy Court sheds light on the common interest doctrine preventing the waiver of privileged communications

In re Leslie Controls, Inc., (Bankr. D. Del., Case No. 10-12199, 2010)

CASE SNAPSHOT

Filed under:
USA, Delaware, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor, Waiver, Interest, Work-product doctrine, Attorney-client privilege, Discovery, Liability (financial accounting), Delaware Supreme Court, United States bankruptcy court
Authors:
Brian M. Rostocki
Location:
USA
Firm:
Reed Smith LLP
Trustee’s use of strong-arm powers limited where state ucc gives priority to the lender that perfects its lien post-petition

Sovereign Bank v Hepner (In re Roser), 613 F.3d 1240 (10th Cir. 2010).

CASE SNAPSHOT

Filed under:
USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Conflict of laws, Debtor, Collateral (finance), Interest, Secured loan, Title 11 of the US Code, Uniform Commercial Code (USA), Trustee, United States bankruptcy court, Tenth Circuit
Authors:
Christopher O. Rivas
Location:
USA
Firm:
Reed Smith LLP
Omission of plat in a mortgage renders its recording a nullity, provides no notice to the trustee and subjects the mortgage to avoidance

Wells Fargo Home Mortgage, Inc. v Richardson (In re Brandt), 434 B.R. 493 (W.D. Mich. 2010)

CASE SNAPSHOT

Filed under:
USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Mortgage loan, Conveyancing, Constructive notice, Wells Fargo, Trustee
Authors:
Brian M. Schenker
Location:
USA
Firm:
Reed Smith LLP
Credit bidding cannot be prohibited – the recent decision in River Road Hotel Partners

In re River Road Hotel Partners, LLC, et al., Case No. 09-B-30029 (Bankr. N.D. Ill. 2010)

CASE SNAPSHOT

Filed under:
USA, Illinois, Insolvency & Restructuring, Leisure & Tourism, Litigation, Reed Smith LLP, Bankruptcy, Credit (finance), Debtor, Federal Reporter, Limited liability company, Default (finance), Secured loan, Federal Deposit Insurance Corporation (USA), US District Court for Northern District of Illinois
Authors:
Stephen T Bobo
Location:
USA
Firm:
Reed Smith LLP
A proposed plan’s voting stock allocation causes an incurable change-of-control breach and impermissible reinstatement of secured debt

In re Young Broadcasting, Inc., et al., 430 B.R. 99 (Bankr. S.D.N.Y. 2010)

CASE SNAPSHOT

Filed under:
USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Share (finance), Shareholder, Credit (finance), Debtor, Unsecured debt, Breach of contract, Board of directors, Interest, Debt, Voting, Default (finance), Secured loan, Pro rata, US District Court for the Southern District of New York
Authors:
Ann E. Pille
Location:
USA
Firm:
Reed Smith LLP
‘Ordinary course of business’ enables supplier to keep payments in a preference action

Burtch v. Detroit Forming, Inc. (In re Archway Cookies), 435 B.R. 234 (Bankr. D. Del. 2010)

CASE SNAPSHOT

Filed under:
USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor, Safe harbor (law), Debt, Trustee, United States bankruptcy court
Authors:
Brian M. Schenker
Location:
USA
Firm:
Reed Smith LLP