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Eighth Circuit rejects foreseeability test for notice to unknown creditors

In Dahlin v. Lyondell Chemical Co., 2018 U.S. App. LEXIS 1956 (8th Cir. Jan. 26, 2018), the Eighth Circuit Court of Appeals rejected an argument that bankruptcy debtors were required by due process to provide more prominent notice of a case filing than they did, such that the notice might have been seen by unknown creditors with claims to assert.

USA, Banking, Insolvency & Restructuring, Litigation, Patterson Belknap Webb & Tyler LLP, Eighth Circuit
Court Holds that Bankruptcy Judges Cannot Impose Punitive Sanctions

Bankruptcy courts lack the power to impose serious punitive sanctions, a federal district judge ruled recently in PHH Mortgage Corporation v. Sensenich, 2017 U.S. Dist. LEXIS 207801 (D. Vt. Dec. 18, 2018). Judge Geoffrey Crawford reversed a bankruptcy judge’s ruling that had imposed sanctions against a creditor based on Rule 3002.1(i) of the Rules of Bankruptcy Procedure, the bankruptcy court’s inherent authority, and Bankruptcy Code section 105.

USA, Insolvency & Restructuring, Litigation, Patterson Belknap Webb & Tyler LLP, Bankruptcy, United States bankruptcy court
Solicitor General recommends US Supreme Court review in dischargeability case

On November 9, responding to a request from the U.S. Supreme Court, the Solicitor General filed a brief at the Court recommending that the petition for writ of certiorari in Lamar, Archer & Cofrin, LLP v. Appling, No. 16-11911, be granted. The petition, seeking review of a unanimous panel decision of the Eleventh Circuit, presents the question of “whether (and, if so, when) a statement concerning a specific asset can be a ‘statement respecting the debtor's . . .

USA, Insolvency & Restructuring, Litigation, White Collar Crime, Patterson Belknap Webb & Tyler LLP, Supreme Court of the United States, Eleventh Circuit
SDNY Bankruptcy Court allows as a claim unamortized original issue discount generated in a fair market value exchange

The Bankruptcy Court for the Southern District of New York overseeing the Residential Capital (“ResCap”) cases issued an opinion on November 15, 2013 (the “Opinion”)2 allowing the unamortized interest associated with original issue discount (“OID”) that was generated in a fair market value exchange and claimed by ResCap’s junior secured noteholders (the “Holders”). While the OID ruling is only one component of the Opinion,3 it may have far reaching implications, as already evidenced in the pricing of other OID notes that were the product of fair market value exchanges.

USA, New York, Insolvency & Restructuring, Litigation, Dechert LLP, Bankruptcy, Interest, Fair market value, Second Circuit, United States bankruptcy court, US District Court for the Southern District of New York
The Delaware Bankruptcy Court confirms that lenders in multiple-level financing structures are entitled to the protections of corporate separateness

The Delaware Bankruptcy Court has confirmed that in multiple-debtor chapter 11 cases, the cramdown rules set forth in section 1129(a)(10) of the Bankruptcy Code must be applied on a per debtor basis as opposed to a per plan basis. See In re JER/Jameson Mezz Borrower II, LLC, No. 11-13338 (MFW), 2011 WL 6749058 (Bankr. D. Del. Dec. 22, 2011) (“Jameson”) and In re Tribune Co., No. 08-13141 (KJC), 2011 WL 5142420 (Bankr. D. Del. Oct. 31, 2011) (“Tribune”).

USA, Delaware, Insolvency & Restructuring, Litigation, Dechert LLP, Bankruptcy, Debtor, Title 11 of the US Code, United States bankruptcy court