SVB Financial Group, the corporate parent of Silicon Valley Bank, filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of New York on March 17. According to a press release issued by SVB Financial Group, its related entities SVB Securities and SVB Capital are not included in the Chapter 11 filing. This bankruptcy filing comes a week after regulators took control of the failed Silicon Valley Bank.

This is part of our Commercial Real Estate Finance COVID-19 Impact Series, which is aimed at providing informed and real-time guidance tailored to various sectors of commercial real estate owners. In the context of recent bankruptcy filings by national shopping center tenants, this article examines the interplay between a tenant bankruptcy and a landlord’s obligations under its loan documents.

The next article in our Commercial Real Estate Finance COVID-19 Impact Series looks at landlord/tenant issues arising from the COVID-19 pandemic through the lens of our Bankruptcy and Restructuring Practice Group, providing informed and real-time guidance tailored to various sectors of commercial real estate owners. In the context of recent bankruptcy filings by national shopping center tenants, this article highlights key areas for consideration when a tenant files bankruptcy and what steps landlords can take to be proactive in these circumstances.

(Bankr. S.D. Ind. Dec. 4, 2017)

The bankruptcy court grants the motion to dismiss, finding the defendant’s security interest in the debtor’s assets, including its inventory, has priority over the plaintiff’s reclamation rights. The plaintiff sold goods to the debtor up to the petition date and sought either return of the goods delivered within the reclamation period or recovery of the proceeds from the sale of such goods. Pursuant to 11 U.S.C. § 546(c), the Court finds the reclamation rights are subordinate and the complaint should be dismissed. Opinion below.

(Bankr. E.D. Ky. Nov. 22, 2017)

(B.A.P. 6th Cir. Nov. 28, 2017)

The Sixth Circuit B.A.P. affirms the bankruptcy court’s dismissal of the Chapter 12 bankruptcy case. The court finds that the bankruptcy court failed to give the debtor proper notice and opportunity to be heard prior to the dismissal. However, the violation of due process was harmless error. The delay in filing a confirmable plan and continuing loss to the estate warranted the dismissal. Opinion below.

Judge: Preston

Attorney for Appellant: Heather McKeever

(6th Cir. Nov. 14, 2017)

(Bankr. W.D. Ky. Nov. 1, 2017)

The bankruptcy court grants the creditor’s motion for stay relief to proceed with a state court foreclosure action. The creditor had obtained an order granting stay relief in a prior bankruptcy filed by the debtor’s son, the owner of the property. The debtor’s life estate interest in the property does not prevent the foreclosure action from proceeding. Opinion below.

Judge: Lloyd

Attorney for Debtor: Mark H. Flener

Attorney for Creditor: Bradley S. Salyer

The Sixth Circuit affirms the B.A.P., holding the entry of summary judgment in favor of the creditors in the nondischargeability action was appropriate. The creditors obtained a default judgment against the debtor in Tennessee state court. The default judgment was on the merits and the doctrine of collateral estoppel applied. Opinion below.

Judge: Rogers

Appellant: Pro Se

Attorneys for Creditors: Keating, Muething & Klekamp, Joseph E. Lehnert, Brian P. Muething, Jason V. Stitt

(Bankr. E.D. Ky. Nov. 1, 2011)