The U.S. Court of Appeals for the Ninth Circuit recently rejected a loan servicer’s appeal from a Bankruptcy Appellate Panel’s ruling to remand to the lower bankruptcy court a punitive damages award for alleged discharge violations.

In so ruling, the Court held that it lacked appellate jurisdiction regarding the Bankruptcy Appellate Panel’s ruling as to the punitive damages award, but affirmed the Bankruptcy Appellate Panel’s denial of the debtors’ motion for appellate attorney’s fees.

The U.S. Court of Appeals for the Ninth Circuit recently affirmed the dismissal of a consumer’s Truth in Lending Act (TILA) claim for lack of subject matter jurisdiction, holding that the claim was barred by the jurisdiction-stripping provision of the federal Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).

A copy of the opinion in Shaw v. Bank of America is available at: Link to Opinion.

The U.S. Court of Appeals for the Fifth Circuit recently reversed the denial of a lender’s motion to compel arbitration in an adversary bankruptcy proceeding for allegedly violating the federal Truth in Lending Act (TILA), holding that — despite conflicting clauses in two different relevant agreements — the parties had entered into a valid arbitration agreement that delegated the threshold issue of arbitrability to the arbitrator.

In this three part blog we highlight three recent court decisions concerning landlord rights and insolvency, which provide cautionary warnings and surprising twists. The questions we consider are:

1. Does a company voluntary arrangement (“CVA”) permanently vary the terms of a lease?
2. Can a landlord be forced to accept a surrender of a lease?
3. What are the consequences of taking money from a rent deposit if the tenant company is in administration?

In part 1 we consider the first question.

The U.S. Court of Appeals for the Third Circuit recently held, in a case of first impression in that circuit, that a secured creditor’s failure to turn over collateral repossessed prior to the filing of the bankruptcy petition does not violate the automatic stay.

A copy of the opinion inIn re Denby-Peterson is available at: Link to Opinion.

The hair salon Regis announced recently that the company has entered administration. The news might not come as a surprise because the chain, prior to the company’s administration, was subject to a company voluntary arrangement (“CVA”) whose validity was challenged by landlords.

The joint administrator of Regis commented: “trading challenges, coupled with the uncertainty caused by the legal challenge, have necessitated the need for an administration appointment”.

The U.S. Court of Appeals for the Fifth Circuit recently held that a bankruptcy court lacks the power to enforce discharge injunctions entered in other districts, and that the debtors’ particular private education loans were not excepted from discharge.

A copy of the opinion in Crocker v. Navient Solutions, LLC is available at: Link to Opinion.

The U.S. Court of Appeals for the Seventh Circuit recently affirmed in part and reversed in part a trial court’s judgment against a debtor who filed an adversary proceeding alleging that a creditor and its counsel violated the bankruptcy discharge by trying to collect a discharged debt, holding that the attorney could not be held in contempt because he lacked knowledge of the discharge, but the creditor could be held liable for the actions of its counsel under agency law.

Can a CVA bind a landlord in respect of future rents? Is the landlord a creditor in respect of future rent? What about the right to forfeit; can a CVA modify that right? Is compromising rent under a CVA automatically unfair to landlords when other trade creditors are paid in full?

These were some of the points considered by the Court in determining whether the Debenhams’ CVA (which had been challenged by landlords) should fail.

One point of particular interest is whether reducing rents below market value in a CVA is automatically unfair to landlords?

There has been an influx of company voluntary arrangements (“CVAs”) in recent times, as retailers fight to rescue their UK high street stores. Retail CVAs accounts for the highest proportion of CVAs at 19%. As more and more CVAs are approved, we consider some of the recent trends seen in the retail sector which showcase the flexibility of a CVA and reflect the demands of landlords whose support is vital to the continuing viability of a business.

What is a CVA?