In recent weeks, the dispute in Windstream’s bankruptcy between Windstream and its REIT spinoff Uniti Group over the lease transaction that ultimately led to Windstream’s chapter 11 bankruptcy has continued to escalate with Windstream filing an adversary complaint against Uniti. In its complaint, Windstream seeks to recharacterize the lease as a disguised financing alleging that the lease resulted in a long-term transfer of billions of dollars to Uniti to the detriment of Windstream’s creditors.
It is well settled that the purpose of filing a bankruptcy petition is to “give[] the honest but unfortunate debtor . . . a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt.” Local Loan Co. v. Hunt, 292 U.S. 234, (1934). A debtor’s discharge in bankruptcy, and the corresponding injunction provisions of the Bankruptcy Code, are the two primary elements that effectuate this financial fresh start.Chapman v. Bituminous Ins. Co. (In re Coho Res., Inc.), 345 F.3d 338, 342 (5th Cir. 2003).
On April 23, 2019, the United States District Court for the Southern District of New York, in fraudulent transfer litigation arising out of the 2007 leveraged buyout of the Tribune Company,1 ruled on one of the significant issues left unresolved by the US Supreme Court in its Merit Management decision last year.
Last week, a Ninth Circuit panel held that plaintiffs in five related cases lacked standing to pursue their FCRA claims. Specifically, the Ninth Circuit held that the allegation that a credit report contained misleading information, absent any indication that a consumer tried to engage in or was imminently planning to engage in any transactions for which the alleged misstatements in the credit reports made or would make any material difference, does not constitute a concrete injury.
A U.S. Bankruptcy Court has denied a creditor’s motion for sanctions against a law firm in the Middle District of Florida which the creditor alleged engaged in serial filings.
A federal bankruptcy court for the Southern District of Florida has ruled that the owner of a computer-financing scheme cannot hide behind a bankruptcy filing to shield himself from complying with a contempt order that required him to pay $13.4 million for violating an FTC order.
Pursuant to 11 U.S.C. § 1322(b)(2), a Chapter 13 bankruptcy plan cannot modify the rights of a secured creditor whose claim is only secured by an “interest in real property that is the debtor’s principal residence.” On December 6, the Eleventh Circuit held that this provision prevents the discharge of a mortgage in a Chapter 13 bankruptcy, regardless of whether the plan “provided for” the mortgage or whether the mortgagee filed a proof of claim.
Intercreditor agreements--contracts that lay out the respective rights, obligations and priorities of different classes of creditors--play an increasingly important role in corporate finance in light of the continued prevalence of complex capital structures involving various levels of debt. When a company encounters financial difficulties, intercreditor agreements become all the more important, as competing classes of creditors seek to maximize their share of the company's limited assets.
The West Virginia Consumer Credit and Protection Act (“WVCCPA”) is a remedial statute designed to protect West Virginia consumers from improper debt collection. Only “consumers” have standing to file a lawsuit under the WVCCPA. The term “consumer” is defined as a natural person that owes a debt or allegedly owes a debt. But does a person still owe debt if that debt was discharged by a bankruptcy court? Although there is some conflicting case law in West Virginia, an answer is forming.
On October 26, the Eastern District of Wisconsin issued a ruling dismissing a Fair Credit Reporting Act case. In Garland v. Marine Credit Union, the Court granted summary judgment in favor of the debt collector, holding the dispute was a legal issue such that the consumer could not establish a factual inaccuracy in the credit reporting.