Joining the Fourth, Fifth, Eighth and Ninth Circuit Courts of Appeal, the Eleventh Circuit recently held that new value does not need to remain unpaid in order to support the subsequent new value defense in a preference action.  See Kaye v. Blue Bell Creameries, Inc. (In re BFW Liquidation, LLC), Case No. 17-13588, 2018 WL 3850101 (11th Cir.

To Lease or Not to Lease

In Corporate Claims Management, Inc. v. Shapier, et al. (In re Patriot National Inc.), Adv. Pro. No. 18-50307 (Bankr. D. Del August 8, 2018), the Delaware Bankruptcy Court found that alleged misappropriation of trade secrets could constitute a violation of the automatic stay under section 362 of the Bankruptcy Code and be subject to turnover under section 542 of the Bankruptcy Code. 

InLaMonica v. CEVA Group PLC, et al. (In re CIL Limited), Adversary No. 14-02442 (Bankr. S.D.N.Y June 15, 2018), the Bankruptcy Court for the Southern District of New York was tasked with deciding whether the “collapsing doctrine” could be used to determine the situs of a fraudulent transfer, which was part of an international, multi-step transaction occurring inside and outside of the United States. 

In Topfer v. Topfer (In re Topfer), Case No. 5-18-ap-00066 RNO (M.D. Pa. July 25, 2018), the Bankruptcy Court for the Middle District of Pennsylvania remanded a three-and half year old divorce proceeding that had been removed to bankruptcy court. But, the remand became more complicated than it needed to be.

The chapter 7 debtor had removed the divorce action immediately after filing for chapter 7 bankruptcy. Shortly after removal, the non-debtor spouse moved to remand the case on mandatory abstention and permissive abstention grounds.

Banks regularly enter into commercial relationships with their customers such as opening new depository accounts.  These relationships are often contractual in nature and seem relatively straightforward until an unexpected incident occurs that causes the relationship to unravel. What then are the duties owed by each party to each another?  The default rule seems to be that the terms and conditions that the parties agreed to at first govern the parties’ actions throughout their banking relationship.

The term “golden shares” is often referred to equity interests held by a specific party—commonly a lender or investor—that authorize such party to block or prevent a corporate entity from filing bankruptcy. Such shares are often negotiated by a party that wants to ensure that its consent is obtained before any bankruptcy is commenced. Without such consent, the party holding the golden shares can seek to dismiss to a corporate bankruptcy filing by based on a lack of corporate authority.

Each year, millions of parents across America write checks to institutions of higher learning, in payment of tuition and charges for their children to pursue a college degree. Inevitably, some of those parents end up in the bankruptcy courts. In recent years, trustees have found an attractive potential source of estate recovery: pursuing the colleges and universities to recover tuition and related payments as constructive fraudulent transfers.

The Bankruptcy Code often instructs a trustee or debtor to perform an act or make an election within a certain time. Sometimes the relevant provisions are intended to benefit a party in interest who is affected by a debtor’s or trustee’s action or election. Unfortunately, some of the provisions that prescribe a trustee or debtor to act fail to provide a remedy to the affected party in interest in the event the trustee or debtor does not act in compliance with the Code.

One of the fundamental elements of the American bankruptcy system is the automatic stay under section 362 of the bankruptcy code. The stay protects the debtor and its assets from creditor activity, in order to facilitate equitable treatment of creditors in the collective bankruptcy process. The remedies provided for violations of the stay allow the estate to enforce the protections provided by section 362.