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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
First (post-) impressions: insider distribution violates absolute priority rule, and competition is essential element of new value corollary

Until 2013, no circuit court of appeals had weighed in on the implications of the U.S. Supreme Court’s pronouncement in the 203 North LaSalle case that property retained by a junior stakeholder under a cram-down chapter 11 plan in exchange for new value “without benefit of market valuation” violates the “absolute priority rule.” See Bank of Amer. Nat’l Trust & Savings Ass’n v. 203 North LaSalle Street P’ship, 526 U.S. 434 (1999), reversing Matter of 203 North LaSalle Street P’ship, 126 F.3d 955 (7th Cir. 1997).

USA, Insolvency & Restructuring, Litigation, Jones Day, Shareholder, Debtor, United States bankruptcy court, Seventh Circuit
Equitable mootness and arbitration: first impressions in the Ninth Circuit

2012 is shaping up as a year of bankruptcy first impressions for the Ninth Circuit. The court of appeals sailed into uncharted bankruptcy waters twice already this year in the same chapter 11 case. On January 24, the court ruled in In re Thorpe Insulation Co., 2012 WL 178998 (9th Cir. Jan. 24, 2012) ("Thorpe I"), that an appeal by certain nonsettling asbestos insurers of an order confirming a chapter 11 plan was not equitably moot because, among other things, the plan had not been "substantially consummated" under the court's novel construction of that statutory term.

USA, Insolvency & Restructuring, Litigation, Jones Day, Ninth Circuit, Tenth Circuit
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)

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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)

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

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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