INTRODUCTION

On Monday, May 29, 2014, the United States Bankruptcy Court for the Southern District of New York approved Sbarro LLC’s plan of reorganization, paving the way for the pizza restaurant chain to exit bankruptcy.  Sbarro filed for chapter 11 protection earlier this year with a prepackaged plan that allowed its prepetition secured lenders to swap over $148 million in debt for control of the reorganized business if higher or otherwise better purchasers for Sbarro’s business did not overbid.  When no alternative purchasers materialized, Sbarro moved forward with its debt-for-equity swap

The U.S. District Court for the Southern District of New York, on April 27, 2014, issued a decision directing the bankruptcy court to dismiss fraudulent transfer complaints brought by the Madoff Securities Investor Protection Act of 1970 (“SIPA”) trustee against investment funds, their customers and individuals when the trustee failed “plausibly [to] allege that defendant[s] did not act in good faith.” SIPC v. Bernard L. Madoff Inv. Sec. LLC, 2014 WL 1651952, at *5 (S.D.N.Y. April 27, 2014).

Can a foreign person exclude foreign-situs assets in determining insolvency exception to cancellation of indebtedness income?

Once again, those of us in the commercial finance world are reminded of the age-old adage caveat emptor. This time the warning is directed at hedge funds and other investors with a penchant for purchasing distressed debt from bank syndicates.

Why it matters

The Bankruptcy Code impairs lenders’ rights in various ways.  Accordingly, lenders have long attempted to devise methods of preventing borrowers from filing for bankruptcy protection.  Such attempts generally have not been successful -- courts hold that as a general matter, a borrower’s pre bankruptcy waiver of the right to file bankruptcy is against public policy and is void.  See, e.g., Klingman v. Levinson,831 F.2d 1292, 1296 n.3 (7th Cir.

Sadly, sometimes tragedy strikes, as it did for the Montreal Maine & Atlantic Railway Ltd. in July, 2013, when one of its trains carrying crude oil derailed and exploded, resulting in 47 deaths, significant property and environmental damage, and the bankruptcy of the Railway. The Railway had a business interruption insurance policy, a settlement was reached with the insurer and the question of who was entitled to the multi-million-dollar settlement arose in the bankruptcy. In re Montreal Maine & Atlantic Ltd., 2014 Bankr. LEXIS 1628. 59 Bankr. Ct. Dec. 101 (Bankr. D.

Over the years, clients have sought my advice after they have obtained a judgment against a limited liability company or a corporation, and after they have tried, without success, to collect on that judgment.  All of the typical judgment enforcement methods have already failed.  Because judgment debtors generally do not volunteer payment and sometimes will take steps to make it much more difficult for a creditor to collect, this scenario is somewhat common.  In response, clients will ask what they can do.  There are a number of options.  These include putting the ju

It’s unfortunate, but it happens: you reach a deal with your customer and prepare to perform your side of the agreement, only to discover that your buyer is insolvent or close to it.  It is essential that you having a working knowledge your rights in this situation, because time is of the essence.