Few courts have construed the meaning of “repurchase agreement” as used in the Bankruptcy Code, so the recent HomeBanc¹ case out of the United States Bankruptcy Court for the District of Delaware is a must-read for “repo” counterparties. The principal issue in HomeBanc was whether several zero purchase price repo transactions under the parties’ contract for the sale and repurchase of mortgage-backed securities fell within the definition of a “repurchase agreement” in Section 101(47) of the Bankruptcy Code.

The outcome of the TOUSA appeal has been much anticipated and closely watched by the lending community, their counsel and advisors, and legal scholars. On May 15, 2012, the Eleventh Circuit Court of Appeals issued its opinion (found here), reversing the District Court for the Southern District of Florida and affirming the Bankruptcy Court for the Southern District of Florida, at least insofar as to the bankruptcy court’s factual findings, but not remedies.

On December 22, 2011, the United States Bankruptcy Court for the District of Delaware inIn re JER/Jameson Mezz Borrower II LLC ¹ dismissed with prejudice a mezzanine borrower’s bankruptcy case for bad faith under Section 1112(b) of the Bankruptcy Code. In doing so, the court clarified that the standard in the Third Circuit to evaluate the good faith of a debtor seeking shelter under the umbrella of Chapter 11 of the Bankruptcy Code is an objective one and does not consider the subjective good faith of a debtor as do courts within the Secon d Circuit.

In Lehman Brothers Special Financing, Inc. v. Ballyrock ABS CDO 2007-1 Limited (In re Lehman Brothers Holdings, Inc.), Adv. P. No. 09-01032 (JMP) (Bankr. S.D.N.Y. May 12, 2011) [hereinafter “Ballyrock”], the United States Bankruptcy Court for the Southern District of New York held that a contractual provision that subordinates the priority of a termination payment owing under a credit default swap (CDS) to a debtor in bankruptcy, and which caps the amount of the termination payment, may be an unenforceable ipso facto clause under section 541(c)(1)(B).

In Geltzer v. Mooney (In re MacMenamin’s Grill, Ltd.), Adv. Pro. No. 09-8266 (Bankr. S.D.N.Y. April 21, 2011), the United States Bankruptcy Court for the Southern District of New York held that the safe harbor in section 546(e) of the Bankruptcy Code does not apply to a small, private leveraged buyout (LBO) transaction that posed no systemic risk to the stability of the financial markets.

On February 10, 2011, the United States Bankruptcy Court for the Eastern District of New York issued a memorandum decision addressing whether the alleged holder of a mortgage loan had sufficient status as a secured creditor to seek relief from the automatic stay to pursue a foreclosure action.1 After resolving the primary issue in controversy on purely procedural grounds and granting the requested relief, the Court analyzed whether an entity that acquires its interest in a mortgage loan through an assignment from Mortgage Electronic Registration Systems, Inc.

The United States Third Circuit Court of Appeals (the "Third Circuit") issued an opinion on February 16, 2011 in the American Home Mortgage chapter 11 proceeding that upheld a determination by the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") on the valuation of a creditor’s claim that in connection with the termination and acceleration of a mortgage loan repurchase agreement.1 The decision is significant because the Third Circuit affirmed the Bankruptcy Court’s decision that the post-acceleration market value of the mortgage loans was not a relevant m