Recent Developments

Recent Developments

It should be common knowledge that a secured creditor, having received proper notice in a Chapter 11 bankruptcy case, faces the risk that its lien will be extinguished if it fails to object to a reorganization plan that does not specifically preserve the lien. Apparently, however, not all secured lenders realize this risk, and some fall prey to a trap for the unwary in §1141(c) of the Bankruptcy Code by failing to protect their liens and place their collateral at risk.

Recent developments

The acquirer attempted to contractually transfer employees to a so-called "transitional company" (Transfergesellschaft) for a few hours only. The employees involved had previously signed five different employment offers presented by the acquirer, some of them limited, some unlimited in time. The acquirer subsequently accepted one of the offers, which was a fixed term contract.

The United States Court of Appeals for the Second Circuit (the "Second Circuit") recently affirmed a broad reading of the safe harbor of United States Bankruptcy Code (the "Bankruptcy Code") section 546(e), which protects from avoidance both "margin payments" and "settlement payments" as well as transfers made in connection with a "securities contract." In Quebecor, the Second Circuit affirmed decisions of the bankruptcy and district courts and held that the purchase by Quebecor World (USA) Inc.

Recent Developments

On a matter of first impression, the Fourth Circuit issued an opinion in the Derivium Capital, LLC bankruptcy case on May 24, 2013,1 affirming the District Court’s ruling that Grayson Consulting Inc. ("Grayson"), the chapter 7 Trustee’s assignee, could not avoid as fraudulent conveyances Wachovia’s2 commissions, fees, and margin interest payments because those payments were protected from recovery by the safe harbor of United States Bankruptcy Code (the "Bankruptcy Code") section 546(e).

Europe, the U.S. and Canada—On 7 May 2013, the US Bankruptcy Court for the District of Delaware denied a motion by European creditors of Nortel Networks Corp. ("Nortel") to certify a direct appeal to the U.S. Court of Appeals for the Third Circuit of the bankruptcy court's 3 April 2013 ruling (Inre Nortel Networks, Inc., Case No. 09-10138 (KG), 2013 BL 92666 (Bankr. D. Del. Apr.

On April 16, 2013, the United States Court of Appeals for the Second Circuit (the "Second Circuit") issued its decision in In re Fairfield Sentry Ltd.,¹ in which the court held that (1) the relevant time for analyzing a debtor’s center of main interest ("COMI") for purposes of recognizing a foreign proceeding is at or around the time a petition for recognition is filed; (2) the determination of COMI is dependent on the facts of each case, which may include insolvency proceedings in the foreign jurisdiction; and (3) the public policy exception to relief sough