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Post-confirmation cramdown interest rate: ‘market formula’ applies to oversecured

In re SJT Ventures, LLC, 2010 WL 3342206 (Bankr. N.D. Texas 2010)

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USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor, Interest, Limited liability company, Default (finance), Secured creditor, Commercial mortgage, Secured loan, Title 11 of the US Code, United States bankruptcy court
In a case of first impression, the circuit court determines that a trustee of a securitized investment pool is a ‘transferee’ in a preference action

Paloian v LaSalle Bank, NA, 619 F.3d 688 (7th Cir. 2010)

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USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Medicaid, Legal personality, Debtor, Accounts receivable, Limited liability company, Remand (court procedure), Tax return (USA), Investment funds, Cashflow, Discounted cash flow, Trustee, United States bankruptcy court, Seventh Circuit
Consideration of a TRAC clause under the UCC and economic realities required to determine if equipment leases are true leases or disguised financing

Hitchin Post Steak Co v General Electric Capital Corporation (In re HP Distribution, LLP), 436 B.R. 679 (Bankr. D. Kan. 2010)

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The United States Bankruptcy Court for the District of Kansas considered whether commercial vehicle leases that contained Terminal Rental Adjustment Clauses (or TRAC provisions) were true leases under Section 365 of the Bankruptcy Code or, instead, disguised financing transactions. The court held that the TRAC leases were true leases that must be either assumed or assigned pursuant to the terms of Section 365.

USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor, Interest, Consideration, Liquidation, Bright-line rule, Uniform Commercial Code (USA), United States bankruptcy court
Texas district court affirms the contractual default interest rate where the debtor is solvent

Good v RMR Investments, Inc, 428 BR 249 (ED Texas, March 31, 2010)

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A secured creditor in a chapter 11 case objected to the confirmation of the reorganization plan of the debtor, arguing that the proper “cramdown” interest rate (court-modified rate) was the pre-petition contractual default rate, rather than the significantly lower cramdown rate. After the debtor appealed, the District Court affirmed, holding that utilizing the contract rate of interest was appropriate because the debtor was solvent.

USA, Texas, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Interest, Limited liability company, Maturity (finance), Default (finance), Secured creditor, Deed of trust (real estate), Title 11 of the US Code, United States bankruptcy court, Fifth Circuit
Defense of imputation of an agent’s bad conduct to its principal clarified in Pennsylvania; independent auditor at risk for $1 billion in damages

Official Committee of Unsecured Creditors of Allegheny Health, Education and Research Foundation v PricewaterhouseCoopers, LLP(3d Cir No 07-1397, May 28, 2010)

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USA, Pennsylvania, Insolvency & Restructuring, Litigation, Non-profit Organizations, Professional Negligence, Reed Smith LLP, Breach of contract, Fraud, Fiduciary, Audit, Negligence, Remand (court procedure), Collusion, Chief financial officer, Pennsylvania Supreme Court
An LLC member/manager is an ‘insider,’ so that payments are preferential transfers subject to avoidance up to one year prior to bankruptcy filing

Longview Aluminum, LLC v Brandt (In re Longview Aluminum, LLC), 2010 WL 2635787 (ND Ill, June 28, 2010)

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USA, Illinois, Company & Commercial, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor, Board of directors, Limited liability company, Consent, Title 11 of the US Code, Trustee, United States bankruptcy court, Seventh Circuit
Sanctions awarded under the bankruptcy court’s ‘inherent authority’

In re 15375 Memorial Corporation, et al, 430 BR 142 (Bankr D Del May 17, 2010)

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USA, Delaware, Energy & Natural Resources, Environment & Climate Change, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Costs in English law, Debtor, Discovery, Legal burden of proof, Holding company, Involuntary dismissal, Line of credit, United States bankruptcy court, Third Circuit
Extension of financial accommodations clarified

A Florida bankruptcy court recently clarified what constitutes a contract to extend financial accommodations for the benefit of the debtor, and the circumstances in which those contracts could be assumed, rejected or terminated. In re Ernie Haire Ford, Inc., 403 B.R. 750 (Bankr. M.D. Fla. 2009).

USA, Florida, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Retail, Debtor, Personally identifiable information, Debt, Motion to compel, Good faith, Precondition, Ford Motor Company, United States bankruptcy court
Third Circuit clarifies degree of control necessary to be an insider

A recent opinion from the U.S. Court of Appeals for the Third Circuit confirms that “actual control” over a debtor is not necessary to qualify as a nonstatutory “insider” for the purpose of extending the period for preference recovery under Section 547 of the Bankruptcy Code. See Schubert v. Lucent Technologies, Inc. (In re Winstar Communications, Inc.), 554 F.3d 382 (3rd Cir. 2009).

USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Breach of contract, Federal Reporter, Debt, Coercion, US Code, Trustee, United States bankruptcy court, Third Circuit