The Bottom Line

The Bottom Line

In one of the first applications of the Supreme Court’s ruling on the scope of section 546(e) in Merit Management, Delaware Bankruptcy Court Judge Carey found that section 546(e)’s safe harbor did not apply to fraudulent transfers between two parties that were not financial institutions, even if the transaction passed through financial intermediaries.

What Happened

The Bottom Line

The Bottom Line:

In another decision affecting Chapter 11 cases, U.S. Bank National Association v. Village at Lakeridge, --- S. Ct. ---, 2018 WL 1143822 (2018), on March 5, 2018, the United States Supreme Court issued a unanimous decision, authored by Justice Kagan, affirming the Ninth Circuit’s decision to review the Bankruptcy Court’s determination of a mixed question of fact and law for clear error, rather than de novo.

The Bottom Line:

The Bottom Line

Owners of small business entities are frequently required to guaranty the debts of such entities.  Those business entities might later file for Chapter 11, and may be able to achieve confirmation of a plan to restructure their indebtedness.   The question then presented is whether this confirmation event affects the separate guaranty obligations of the owners?  The Tenth Circuit Court of Appeals recently explored this issue in In re: Larry

Most loan contracts include provisions allowing the collection of attorneys’ fees in the event the borrower defaults.  These attorney fee provisions are routinely enforced in collection suits brought in state courts.

Insiders who loot their corporate entities often dispose of the cash proceeds in transactions with third parties. A recent Seventh Circuit opinion, In re Equipment Acquisition Resources, Inc., 14-2174 (7th Cir. October 13, 2015) (the “EAR Opinion”)addresses a common risk faced by a third party who receives cash from the defrauding insider.