In re RML Dev., Inc., 528 B.R. 150 (Bankr. W.D. Tenn. 2014) –

A mortgagee sought to modify a sale order to (1) modify the bid procedures and (2) confirm that it had a right to credit bid.

Last week, the Second Circuit Court of Appeals affirmed a decision by the Bankruptcy Court for the Southern District of New York in In re TPG Troy, LLC, 2015 U.S. App.

Setoff is commonly encountered in bankruptcy and non-bankruptcy situations.  If there are mutual debts between two entities, either may generally offset the debts.  These debts frequently arise where one entity is a vendor to a customer and selling on credit, and at the same time is also making occasional purchases on credit from the customer.  If one entity owes $100 to a second entity but is owed $300 by this second entity, these mutual debts may be offset, leaving just the $200 owed by the second entity.

The United States Bankruptcy Appellate Panel for the Eighth Circuit recently held that filing a proof of claim on a time-barred debt is not, alone, a prohibited debt collection practice under the federal Fair Debt Collection Practices Act.

A copy of the opinion is available at: Link to Opinion.

Recharacterization: an overview

A recent court ruling is a good reminder to health care providers that bankruptcy may not (as is sometimes suggested) be a safe harbor for providers in danger of being forced out of business by the loss of their Medicare and Medicaid provider agreements.

In a matter of first impression, the Delaware Court of Chancery held inQuadrant Structured Products Co. Ltd. v. Vertin, No. 6990-VCL, 2015 BL 128889 (Del. Ch. May 4, 2015), that a creditor suing derivatively on behalf of an insolvent corporation does not lose standing to prosecute the derivative claims if the corporation becomes solvent while the lawsuit is pending. In so ruling, the court expressly rejected a “continuous insolvency” or an “irretrievable insolvency” requirement for standing purposes.

In a recent decision, the United States Court of Appeals for the Eleventh Circuit reaffirmed its position sanctioning, under appropriate circumstances, nonconsensual third party release provisions in chapter 11 plans. In SE Prop. Holdings, LLC v. Seaside Eng’g & Surveying, Inc.(In re Seaside Eng’g & Surveying, Inc.), 780 F.3d 1070 (11th Cir. 2015), the Eleventh Circuit affirmed bankruptcy and district court decisions approving a debtor’s chapter 11 plan that released the debtor’s former principals over the objection of a noninsider equity holder.

Fees on Fees

On June 15, 2015, the U.S. Supreme Court handed down its ruling in Baker Botts LLP et al. v. ASARCO LLC, No. 14-103, 2015 BL 187887 (June 15, 2015), in which it considered whether a bankruptcy court has the power to award fees to a law firm for defending its fee application for services performed on behalf of a chapter 11 debtor.

"In Wellness Int’l Network, Ltd. v. Sharif, ___ U.S. ___, 135 S. Ct. 1932 (2015), a divided U.S. Supreme Court resolved the circuit split regarding whether a bankruptcy court may, with the consent of the litigants, adjudicate a claim that, though statutorily denominated as “core,” is not otherwise constitutionally determinable by a bankruptcy judge. The majority held that so long as consent—whether express or implied—is “knowing and voluntary,” Article III of the U.S. Constitution is not violated by a bankruptcy court’s adjudication of such a claim.