A recent decision by the United States Bankruptcy Court for the Southern District of New York1 found that a UCC-3 termination statement filed on behalf of a secured creditor was not effective because it lacked the proper authorization.
The U.S. Bankruptcy Appellate Panel (“BAP”) for the Eighth Circuit held on March 25, 2013, that a lender “lost its possessory lien when it turned the Debtor’s account funds over to the Trustee without first seeking adequate protection.” In re WEB2B Payment Solutions, Inc., _____ B.R. 2013 _____, 2013WL 1188041, *5 (8th Cir. B.A.P. March 25, 2013) (emphasis added).
A bankruptcy court in Texarkana, Texas held that breaches by two debtor-franchisees of a non-competition covenant in their franchise agreement with a print shop franchisor qualified for discharge through bankruptcy. As the court noted, in addition to equitable remedies such as injunctive relief, Michigan law (under which the franchise agreement was governed) allowed for the award of monetary damages as compensation for violation of a non-competition agreement. Because monetary damages were an available remedy, the court reasoned, the breach of the covenant qualified as a dischar
In June, 2012, Stockton California filed a bankruptcy case under chapter 9. While businesses and individuals are entitled to file bankruptcy petitions without bankruptcy court approval, the same is not true for municipalities. They can only be debtors if, among other things, the majority of their creditors agree; they negotiate in good faith and fail to obtain majority agreement; negotiation is impracticable; or a creditor is attempting to obtain a voidable preference. In addition, the bankruptcy court can dismiss a municipality’s petition if it was not filed in “good fait
In a recent decision by the Bankruptcy Court for the District of Delaware, the court adopted a flexible approach to consensual third party releases in a plan of reorganization. In In re Indianapolis Downs, LLC, 2013 Bankr. LEXIS 384 (Bankr. D. Del. Jan. 31, 2013), the court permitted third party releases where creditors failed to opt out of the release provisions of the plan either by not submitting their vote on the plan, or by voting against the plan but failing to check the “opt out” box on the ballot.
Recently, we've been seeing debtors try to confirm cram down plans of reorganization that are unfavorable to the secured creditor by "gerrymandering" the class of unsecured claims. The typical situation finds the secured creditor holding an undersecured loan. Under Section 506(a) of the Bankruptcy Code, the secured creditor's claim is automatically bifurcated into a secured claim in an amount equal to the value of the collateral and an unsecured claim for the balance of the debt.
An issue that is often overlooked, but should be considered in the context of large project transactions, is the potential insolvency of contractors and subcontractors. A bankruptcy proceeding involving a key contractor can cause headaches and costly delays, particularly if title to goods or work completed has not been transferred to a project owner. Accordingly, anticipating these types of issues and accounting for them in negotiating construction and supply contracts is an important step in any large project transaction.
In Part 1 of this commercial landlord's guide (published in the March 20 - April 2 issue of the CREJ), I addressed some of the issues faced by a landlord when a commercial tenant files bankruptcy.
The U.S. Trustee in American’s Chapter 11 bankruptcy proceedings is challenging American’s $19.8 million golden parachute for its CEO Tom Horton.
The U.S. Court of Appeals for the Seventh Circuit became the second federal appellate court to extend successor liability under the FLSA to an asset purchaser. In Teed et al, v.