On January 17, 2017, the Court of Appeals for the Second Circuit issued its long-anticipated opinion in Marblegate Asset Management, LLC v. Education Management Finance Corp., 1 ruling that Section 316(b) of the Trust Indenture Act of 1939, 15 U.S.C. § 77ppp(b) (the “Act”), prohibits only non-consensual amendments to core payment terms of bond indentures.

Section 316(b) of the Trust Indenture Act of 1939 (“TIA”) provides that, subject to certain exceptions, the right of a holder of an indenture security to receive principal and interest payments, or to institute suit to enforce such payments after they become due, shall not be impaired or affected without such holder’s consent. Market participants had long viewed Section 316(b) of the TIA as a “boilerplate” provision, contained or incorporated by reference in most high yield indentures, that protected only a bondholder’s right to bring suit to enforce payment obligations.

If your bank is in the process of a merger or has agreed to buy or sell a portfolio of mortgage loans, notices must be provided to the borrowers before and after the transaction closes. Care must be taken to determine the notices required and how they are worded to avoid violating potentially conflicting laws.

Like most things, there is a time when a corporation must come to an end. This may be because a business is sold or discontinued, or the corporation otherwise no longer serves a useful purpose. State law governs the dissolution procedures for a corporation, and hence the available procedures may vary in significant respects depending on the state of organization (under Delaware law, for example, a corporation may opt for “long-form” dissolution which involves notifying potential claimants and may foreclose post-dissolution claims against directors).

Your business real estate may not be safe from a separate, but related, company’s bankruptcy.

Status: Upcoming/New Filing

Acquirer: Draper Athena

Acquired: ATopTech, Inc. (US)

Industry: Software

American Apparel, the struggling clothing manufacturer and retailer, found itself in chapter 11 this past November after failing to implement its turnaround plan amid a challenging retail environment. Last week, Judge Shannon in the District of Delaware approved a largely consensual sale of American Apparel’s assets to Gildan Activewear. While the hearing transcript is not yet available, several sources are reporting that, when discussing next steps in the case, Judge Shannon indicated that he is not likely to entertain a structured dismissal.

A “life settlement” is the sale of a life insurance policy to a third party for a value in excess of the policy’s cash surrender value, but less than its death benefit. The life settlement industry focuses on the purchase and sale of life settlements or fractional interests in life settlements to investors. These investors may be anyone from individuals to groups of investors, hedge funds or other institutional investors.

Slide Rules and Hula Hoops – Business Obsolescence and Bankruptcy

(Bankr. E.D. Ky. Jan. 6, 2017)

The bankruptcy court overrules the creditor’s objection to confirmation of the Chapter 13 plan. The creditor argued its claim, secured by the debtors’ mobile home, should be increased by the cost of delivery and set-up of the home. The court holds that set-up and delivery costs may not be used as a means to increase the replacement value as a matter of law. Opinion below.

Judge: Wise

Attorney for Debtor: Daryle M. Ronning

Attorneys for Creditor: McBrayer, McGinnis, Leslie & Kirkland, Zachary A. Horn