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Corporate minds do not all think alike: The Supreme Court affirms a purposive approach to the corporate attribution doctrine

Two recent Supreme Court of Canada decisions demonstrate that the corporate attribution doctrine is not a one-size-fits-all approach.

Canada, Company & Commercial, Insolvency & Restructuring, Litigation, McCarthy Tétrault LLP, Supreme Court of Canada
There’s Something About (Hail) Mary: Appeals of Sale Processes and Pre-Receivership Sale Agreements

Court approval of a sale process in receivership or Bankruptcy and Insolvency Act (“BIA”) proposal proceedings is generally a procedural order and objectors do not have an appeal as of right; they must seek leave and meet a high test in order obtain it. However, in Peakhill Capital Inc. v.

Canada, Ontario, Insolvency & Restructuring, Litigation, McCarthy Tétrault LLP
Creditor defeats preference action based on ‘new value’ defense

In re ESA Environmental Specialists, Inc., 2013 WL 765705 (4th Cir., Mar. 1, 2013)

CASE SNAPSHOT

USA, Insolvency & Restructuring, Insurance, Litigation, Projects & Procurement, Reed Smith LLP, Letter of credit, Debtor, Collateral (finance), Debt, Liquidation, Certificate of deposit, European Space Agency, Fourth Circuit
Defrauded initial lien holder maintains priority over subsequent innocent lenders

In re RAG East, LP– Case no. 12-04545-CMB (Bankr. W.D. Pa. March 4, 2013)

CASE SNAPSHOT

The court granted summary judgment in favor of a defrauded lender in a lien priority dispute with subsequent third-party lenders. The court determined that the lien of a purchase money mortgage that was allegedly released pursuant to a fraudulent satisfaction piece nonetheless had priority over the liens held by innocent third parties who provided loans to the debtor without notice of the fraud.

FACTUAL BACKGROUND

USA, Pennsylvania, Banking, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Fraud, Mortgage loan
Discrimination in classification of claims okay, so long as not unfair discrimination

In re Sea Trail Corporation, Case No. 11-07370- 8-SWH (Bankr. E.D.N.C., Oct. 23, 2012)

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USA, North Carolina, Insolvency & Restructuring, Litigation, Reed Smith LLP, Shareholder, Debtor, Unsecured debt, Discrimination, Market liquidity, Liquidation
Secured creditor does not particip ate in bankruptcy case, court allows lien to pass through plan confirmation

In re S. White Transp., Inc., 473 B.R. 695 (S.D. Miss. 2012)

CASE SNAPSHOT

USA, Mississippi, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor, Secured creditor, United States bankruptcy court, Fifth Circuit
Reasonableness of pre-petition default rate under section 506(a) not subject to equitable analysis

In re 400 Walnut Associates, L.P., 2012 BL 140988 (E.D. Pa. June 7, 2012)

CASE SNAPSHOT

The creditor appealed the denial of its claim for pre-petition interest at the contractual default rate. The district court reversed and remanded the case, holding that the bankruptcy court had incorrectly applied an "equitable analysis" in making its decision.

FACTUAL BACKGROUND

USA, Pennsylvania, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Interest, Default (law), Default (finance), Title 11 of the US Code, United States bankruptcy court
‘Intent’ inferred, summary judgment granted in debt recharacterization case

In re Shubh Hotels Pittsburgh, Inc., Bankr. No. 10-26337JAD (Bankr. W.D. Pa. July 24, 2012)

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USA, Pennsylvania, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Interest, Debt, Balance sheet
A defendant may have a complete defense to a commercial claim where a plaintiff has failed to disclose the claim in a prior discharged bankruptcy

When being sued, corporate and individual defendants should always confirm that the plaintiff has not been previously discharged in bankruptcy and failed to disclose the claim in the proceeding as an asset of the bankruptcy estate. In Guay v. Burack, 677 F.3d 10 (1st Cir. 2012), the plaintiff brought numerous claims against various governmental entities, governmental officials and a police officer.

USA, Insolvency & Restructuring, Litigation, Masuda Funai Eifert & Mitchell Ltd, Bankruptcy, Debt
Free-and-clear asset sales price must exceed outstanding debt to satisfy section 363(f)(3)

In re Nance Properties, Inc., Case No. 11-06197- 8-JRL (Bankr. E.D.N.C. Nov. 8, 2011)

CASE SNAPSHOT

USA, North Carolina, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Debt, Secured creditor