Four decades ago, when I began my legal career, bankruptcy sales were held in low regard. They were regarded, and often referred to, as “fire sales” that were almost certain to attract no interested parties other than bottom feeding liquidators seeking to pay only a fraction of the value of the marketed assets. For this reason, potential sellers steered clear of bankruptcy.

Since reports last month that a grand bargain had been struck to provide an infusion of cash to the Detroit bankruptcy in exchange for conveying the artwork at the Detroit Institute of Arts back to the museum itself, it has been largely accepted that the deal would succeed.  The deal would contribute $366 million from several foundations, $100 million from the DIA foundation, and $350 million from the State of Michigan.  This air of inevitability is due in large part to the cards that Emergency Manager Kevyn Orr holds: unless Detroit wants to monetize or sell the DIA collection th

Senior Counsel Greg Laughlin discusses the legislative steps being taken to prevent future large-scale government bailouts of distressed financial institutions. From implementation of the Dodd-Frank Act to the introduction of the PATH Act in the U.S. House of Representatives, efforts are underway to end bailouts by placing greater emphasis on private capital solutions that diminish the need for taxpayer dollars.

Click here to view the video.

As is well known, the right to credit bid is the entitlement of a secured lender to bid the amount of its outstanding claims at the sale of its collateral. If the secured lender places the winning bid, no money is exchanged and the purchase price is offset against the existing claims. Credit bidding provides an important right to secured lenders in ensuring that their collateral is not sold for a depressed value. If a secured lender thinks its collateral is being sold too cheaply, it has the option of taking the collateral in exchange for some or all its claims.

“The Pen Is Mightier Than The Sword…And Verbal Communications During Company-Wide Employee Meetings.”

In a recent decision that has captured the attention of the U.S. secondary loan market, the United States District Court for the Western District of Washington starkly concluded that hedge funds “that acquire distressed debt and engage in predatory lending” were not eligible buyers of a loan under a loan agreement because they were not “financial institutions” within the Court’s understanding of the phrase.

In the recent case of Davis v. Elliot Mgmt. Corp. (In re Lehman Bros. Holdings Inc.), 2014 U.S. Dist. LEXIS 48102 (S.D.N.Y. Mar. 31, 2014), the District Court for the Southern District of New York issued a decision barring reorganization plans from paying legal fees of individual members of official creditors’ committees absent a showing of substantial contribution to the estate.

In a matter of first impression, the United States District Court for the Southern District of New York recently held that former employees of a subcontractor of Hawker Beechcraft Corporation (“Hawker”)—a company that emerged from bankruptcy in 2013 and was purchased by Textron Inc.

In an important decision for lenders, the 1st Circuit Court of Appeals recently decided In re SW Boston Hotel Venture LLC, holding that a bankruptcy court was right to give a lender a claim for post-petition interest beginning on the date of the sale of its collateral rather than the commencement date of the debtor’s bankruptcy case.

A recent opinion out of the United States Bankruptcy Court for the Eastern District of Virginia (Richmond Division) serves as a reminder to secured creditors to steer clear of conduct that a bankruptcy court may deem inequitable and provide the court with cause to limit the secured creditor’s credit bid rights.  In In re The Free Lance-Star Publishing Co.