(Bankr. S.D. Ind. Feb. 15, 2017)

In In re NewPage Corporation, et al., Adversary Proceeding No. 13-52429 (Bankr. D. Del. Feb. 13, 2017), a Delaware Bankruptcy Court applied a unique defense to certain preferential transfers targeted by a liquidating trustee. The defense focuses on a commonly overlooked element of a preferential transfer, section 547(b)(5).

Preference 101

A deposit into a checking or savings account seems like a pretty straightforward and innocuous transaction–unless the customer files for bankruptcy, and the bankruptcy trustee starts looking for assets to recover. Bankruptcy trustees will seek to recover money that once belonged to the borrower under various theories including fraudulent conveyance, particularly if the debtor-bank customer was running some sort of Ponzi or investment fraud scheme.

(S.D. Ind. Feb. 17, 2017)

The district court affirms the bankruptcy court’s judgment in favor of the plaintiff trust. The bankruptcy court held that the trust could pierce the corporate veil and hold the debtor personally liable to the trust. The district court analyzes Indiana law on veil piercing and finds no error. Opinion below.

Judge: Young

Attorney for Debtor: Goering Law LLC, Wilmer E. Goering, II

Attorney for Plaintiff: Kroger Gardis & Regas LLP, David E. Wright

State and federal laws provide numerous protections to secured parties to preserve their interests in collateral. As secured parties well know, however, these protections become more and more limited when the collateral is pledged to multiple secured parties. Issues, like priority of interests and liens, become more prevalent when the collateral at issue falls in value and multiple secured parties are fighting to enforce their interests in order to satisfy their debts.

On February 8, 2017, the U.S. District Court for the Western District of Oklahoma dismissed the class action lawsuit brought by unsecured bondholders of Chesapeake Energy Corporation ("Chesapeake"), adopting the so-called narrow reading of Section 316(b) of the Trust Indenture Act of 1939 ("TIA").[1]

On February 15, 2017, Calrissian LP, a Burlingame, CA-based entity, filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Case No. 17-10356). Calrissian is the parent holding company of Our Alchemy LLC (Case No. 16-11596) and Anderson Digital LLC (Case No. 16-11597), which filed petitions for relief under Chapter 7 in the Bankruptcy Court for the District of Delaware on July 1, 2016.

(S.D. Ind. Feb. 13, 2017)

State and federal laws provide numerous protections to secured parties to preserve their interests in collateral.  As secured parties well know, however, these protections become more and more limited when the collateral is pledged to multiple secured parties.  Issues, like priority of interests and liens, become more prevalent when the collateral at issue falls in value and multiple secured parties are fighting to enforce their interests in order to satisfy their debts.

Recently, in a split (2-1) decision, the United States Court of Appeals for the Second Circuit overturned the United States District Court for the Southern District of New York’s decision in Marblegate Asset Management, LLC v. Education Management Finance Corp., 111 F. Supp.3d 542 (S.D.N.Y. 2015) (“Marblegate II”). The Second Circuit held in Marblegate Asset Management, LLC v. Education Management Finance Corp., No. 15-2124, 2017 U.S. App. LEXIS 782 (2d Cir. Jan.