PricewaterhouseCoopers LLC (PwC) won another victory in the MF Global litigation when the Second Circuit Court of Appeals affirmed the dismissal of claims brought by former commodities customers (the “Customers”) of MF Global Inc. (“MFGI”). This holding is important for its clear affirmation of the in pari delicto doctrine and as a visible limitation on claims by parties not in privity.

The U.S. District Court for the Southern District of New York, on May 4, 2015, affirmed U.S. Bankruptcy Judge Robert D. Drain’s decision confirming the reorganization plan for Momentive Performance Materials Inc. and its affiliated debtors.1 The Bankruptcy Court’s decision was controversial because it forced the debtors’ senior secured creditors to accept new secured notes bearing interest at below- market rates.

Compensation to be paid to a bankruptcy estate professional is many times subject to intense dispute. In the case of a bankruptcy trustee, section 326 of the Bankruptcy Code provides for a tiered system of compensation based upon the amount of money distributed by the trustee to parties in interest. However, as demonstrated by the recent decision in In re Virgin Offshore U.S.A., Inc., 2015 Bankr. LEXIS 233 (Bankr. E.D. La. Jan.

On January 7, the Bankruptcy Court for the District of Delaware issued an opinion that may have far reaching effects on cases involving asbestos liability.  Companies with potential asbestos liability, and actual and potential asbestos claimants, would be well advised to consider the Court’s opinion.

Imagine: you are a lender that has loaned substantial sums of money to an individual, secured by real property owned by the borrower. After the borrower defaults and negotiations fail, you seek and obtain the appointment of a receiver. But now litigation ensues—about the loan documents, about contract defaults, about interest rates, about foreign law. After a substantial investment of time and money, your trial date draws closer. At some point during this odyssey, your borrower secretly transfers the real property collateral to a newly-created, single-member LLC.

On Aug. 26, 2014, Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York denied the payment of a $200 million make-whole premium. See Corrected and Modified Bench Ruling on Confirmation of Debtors’ Joint Chapter Plan of Reorganization for Momentive Performance Materials Inc. and its Affiliated Debtors, In re MPM Silicones, LLC, No. 14-22503 (Bankr. S.D.N.Y. Sept. 9, 2014) [D.I.

The U.S. Court of Appeals for the Fifth Circuit held on June 23, 2014 that an oversecured lender’s legal fees were subject to the bankruptcy court’s review for reasonableness despite a court-ordered non-judicial foreclosure sale of the lender’s collateral. In re 804 Congress, LLC, ­­__ F.3d ­­__, 2014 WL 2816521 (5th Cir. June 23, 2014). Affirming the bankruptcy court’s power and reversing the district court, the Fifth Circuit found the lender’s utter failure to detail its legal fees with any documentary support to be fatal.

Facts

On October 21, 2010, the New York Court of Appeals (the Appeals Court), New York’s highest appellate court, addressed two appeals, and then issued an important ruling regarding the parameters of the affirmative defense of in pari delicto in suits against outside auditors, holding that the doctrines of in pari delicto and imputation are a complete bar to recovery when the corporate wrongdoer’s actions are imputed to the company.

The Doctrines of In Pari Delicto and Imputation