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United States Supreme Court to Decide Whether Recharacterization of Debt Should Be Decided by State or Federal Law

On June 27, 2017, the United States Supreme Court granted the petition for writ of certiorari regarding the decision In re Province Grande Olde Liberty, LLC, 655 Fed.Appx. 971 (4th Cir. Aug. 12, 2016) to decide a circuit split on the applicable standard for debt recharacterization.

USA, Banking, Insolvency & Restructuring, Litigation, Buchanan Ingersoll & Rooney PC, Bankruptcy, Debtor, Debt, Secured loan, Supreme Court of the United States, United States bankruptcy court
Ninth Circuit Holds That Cure Amount May Include Post-Default Rate of Interest

In Pacifica L 51 LLC v. New Investments, Inc. (In re New Investments, Inc.), 840 F.3d 1137 (9th Cir. 2016), the Ninth Circuit Court of Appeals held that Section 1123(d) of the Bankruptcy Code provides that a cure amount may include a post-default rate of interest if the underlying loan documents and applicable non-bankruptcy law provide for the payment of post-default rate interest upon a default.

USA, Banking, Insolvency & Restructuring, Litigation, Buchanan Ingersoll & Rooney PC, Default (finance), Ninth Circuit, United States bankruptcy court
A defendant may have a complete defense to a commercial claim where a plaintiff has failed to disclose the claim in a prior discharged bankruptcy

When being sued, corporate and individual defendants should always confirm that the plaintiff has not been previously discharged in bankruptcy and failed to disclose the claim in the proceeding as an asset of the bankruptcy estate. In Guay v. Burack, 677 F.3d 10 (1st Cir. 2012), the plaintiff brought numerous claims against various governmental entities, governmental officials and a police officer.

USA, Insolvency & Restructuring, Litigation, Masuda Funai Eifert & Mitchell Ltd, Bankruptcy, Debt
Delaware Supreme Court holds creditors of insolvent LLCs do not have derivative standing

CML V, LLC v. Bax, et al., 2011 Del. LEXIS 480 (Del. Sept. 2, 2011)

CASE SNAPSHOT

Affirming the decision of the Court of Chancery for the State of Delaware, the Delaware Supreme Court held that, unlike corporate creditors, creditors of a Delaware Limited Liability Company do not have standing to sue the LLC’s officers derivatively on behalf of an insolvent LLC.  

FACTUAL BACKGROUND

USA, Delaware, Insolvency & Restructuring, Litigation, Reed Smith LLP, Limited liability company, Standing (law), Balance sheet, Internal control, Derivative suit, Court of Chancery, Delaware Supreme Court, Court of equity
Court finds defendants knowingly waived right to jury trial, affirms such waivers must be clear

Lehman Brothers Holdings, Inc. v. Bethany Holdings Group, LLC, et al., 2011 WL 3427013, (S.D.N.Y. Aug. 5, 2011)

CASE SNAPSHOT

USA, Banking, Insolvency & Restructuring, Litigation, Real Estate, Reed Smith LLP, Surety, Waiver, Jury trial, Default (finance), Lehman Brothers
In a case of first impression, court grants administrative priority status to post-petition withdrawal liability

In re Marcal Paper Mills, Inc., No. 09-4574, 650 F.3d 311 (3d Cir., 2011)

CASE SNAPSHOT

USA, Employee Benefits & Pensions, Insolvency & Restructuring, Litigation, Reed Smith LLP, Employee Retirement Income Security Act 1974 (USA), Defined benefit pension plan, Third Circuit
Recent significant commercial bankruptcy filings

Masuda, Funai, Eifert & Mitchell routinely represents creditors in bankruptcy proceedings in order to protect their contractual and legal interests and rights to payment. The following is a list of some recent larger U.S. bankruptcy filings in various industries. To the extent you are a creditor to any of these debtors, or other entities which may have filed for bankruptcy protection, you as a creditor are entitled to certain protections under the Bankruptcy Code.

AUTOMOTIVE

USA, Insolvency & Restructuring, Masuda Funai Eifert & Mitchell Ltd, Bankruptcy, Debtor, Unsecured debt, Option (finance), Title 11 of the US Code, United States bankruptcy court
Director’s motion to dismiss breach of duty of good faith claim denied

NHB Assignments, LLC v. General Atlantic, LLC and Braden Kelly (In re PMTS Liquidating Corp., et al.) Case No. 08-11551 (BLS) (Bankr. D. Del. July 1, 2011)  

CASE SNAPSHOT

USA, Delaware, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Breach of contract, Fraud, Fiduciary, Board of directors, Interest, Limited liability company, Liquidation, Good faith, Due diligence, Title 11 of the US Code, Chief executive officer, Trustee
Credit swap agreement ipso facto clause struck

Lehman Brothers Special Financing, Inc. v. Ballyrock ABS-CDO 2007-1 Limited (In re Lehman Brothers Holdings, Inc.) No. 09-01032 (JMP) (Bankr. S.D.N.Y. May 12, 2011)  

CASE SNAPSHOT

USA, New York, Derivatives, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Surety, Debtor, Injunction, Swap (finance), Liquidation, Asset forfeiture, Default (finance), Collateralized debt obligation, Mortgage-backed security, Right to property, Lehman Brothers, US District Court for the Southern District of New York
FAA registration law does not preempt state UCC where partially completed airplanes fail to satisfy FAA definition of “aircraft”

Mata, et al., v. Eclipse Aerospace, Inc. (In re AE Liquidation, Inc., et al.) Case No. 08-51891, 2011 BL 51047 (Bankr. D. Del. Feb. 28, 2011)

CASE SNAPSHOT

USA, Delaware, Aviation, Insolvency & Restructuring, Litigation, Reed Smith LLP, Federal preemption, Debtor, Breach of contract, Fraud, Liquidation, Aircraft registration, Constructive trust, Federal Aviation Administration, Uniform Commercial Code (USA), Trustee, United States bankruptcy court