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.
On 16 April 2014, the Official Gazette published Norm 5 of 2014 of the Romanian Financial Supervisory Authority (the“FSA”) as a supplement to several regulations relating to the calculation of the re/insurer’s solvency margin, the minimum solvency margin and the safety fund (“Norm 5/2014”).
On 14 April 2014, the Official Gazette published Order 562 of 1 April 2014 for the amendment of and supplement to Order 235 of 2001 regarding the insurance of tourists against the insolvability or bankruptcy of travel agencies (“Order 562/2014”).
We recently wrote about the highly controversial decision of the Delaware Bankruptcy Court in In re Fisker Automotive capping a secured creditor’s right to credit bid its $168 million claim at $25 million.[1] The secured creditor immediately appealed to the District Court.[2] As a procedural matter, the secured creditor had an absolute right to have its appeal heard only if the Bankruptcy Court’s ruling was considered a “final order.” If it was not a “final order,” then the District Court had discretion on whether to hear the merits of the appeal. On Feb.
On Jan. 10, 2014, the United States Bankruptcy Court for the District of Delaware (the “Court”) in In re Fisker Automotive Holdings, Inc., et al., capped a secured creditor’s right to credit bid its $168 million claim at only $25 million (the amount it paid to purchase the claim). The decision is on appeal. While the Court stated that its decision is non-precedential, it serves as a cautionary tale for secured lenders who also are potential acquirers of a debtor’s assets in bankruptcy sales.
Facts
Loan to Fisker
A New York bankruptcy court, on Dec. 12, 2013, issued a 166-page decision after a 34-day trial, concluding that the spin-off of a highly profitable energy business constituted a fraudulent transfer intended to shield the business from massive environmental liabilities, and awarding damages of up to approximately $14.5 billion.[1]Tronox Inc. et al. v. Kerr McGee et al. (In re Tronox et al.) (Bankruptcy S.D.N.Y. Dec. 12, 2013) (J.
On Sept. 12, 2013, the United States Court of Appeals for the Second Circuit affirmed the bankruptcy court’s decision to deny payment of a make-whole premium (the “Make-Whole Amount”) to bondholders under three separate indentures (the “Indentures”) based on the plain language of those agreements. U.S. Bank Trust Nat’l Ass’n v. AMR Corp. et al. (In re AMR Corp.), __ F.3d __, 2013 WL 4840474 (2d Cir. Sept. 12, 2013) (“In re AMR Corp. II”).
A lender’s right to recover a make-whole premium as part of its allowed claim in a bankruptcy case has been the subject of several recent court decisions. A Delaware bankruptcy court recently allowed a make-whole premium of $23.7 million on a $67 million term loan[1] and found that the premium was not “plainly disproportionate” to the creditor’s possible loss. As a result, the make-whole was not an unenforceable penalty under New York law. In re School Specialty, Inc., No. 13-10125, Slip Op. (Bankr. D. Del. Apr. 22, 2013).[2]
Facts
The United States District Court for the Southern District of New York dismissed an insider preference complaint by Capmark Financial Group Inc. and its affiliates ("Capmark") seeking to recover a $145 million pre-bankruptcy payment from a lender group. Capmark Financial Group Inc. v. Goldman Sachs Credit Partners L.P., __ F. Supp. 2d __, 2013 WL 1420243 (S.D.N.Y. Apr.
The U.S. Bankruptcy Appellate Panel (“BAP”) for the Eighth Circuit held on March 25, 2013, that a lender “lost its possessory lien when it turned the Debtor’s account funds over to the Trustee without first seeking adequate protection.” In re WEB2B Payment Solutions, Inc., _____ B.R. 2013 _____, 2013WL 1188041, *5 (8th Cir. B.A.P. March 25, 2013) (emphasis added).