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Credit bidding cannot be prohibited – the recent decision in River Road Hotel Partners

In re River Road Hotel Partners, LLC, et al., Case No. 09-B-30029 (Bankr. N.D. Ill. 2010)

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USA, Illinois, Insolvency & Restructuring, Leisure & Tourism, Litigation, Reed Smith LLP, Bankruptcy, Credit (finance), Debtor, Federal Reporter, Limited liability company, Default (finance), Secured loan, Federal Deposit Insurance Corporation (USA), US District Court for Northern District of Illinois
Sixth Circuit: privately held stock buyout protected as 'settlement payments'

In a decision with potentially broad implications, the U.S. Court of Appeals for the Sixth Circuit recently determined that payments made to former shareholders of a privately held company in a leveraged buyout transaction are protected as "settlement payments" pursuant to section 546(e) of the Bankruptcy Code.

USA, Corporate Finance/M&A, Insolvency & Restructuring, Litigation, Reed Smith LLP, Public company, Bankruptcy, Shareholder, Debtor, Security (finance), Federal Reporter, Privately held company, Debt, Leveraged buyout, Debtor in possession, Title 11 of the US Code, Eighth Circuit, United States bankruptcy court, Sixth Circuit
Transfer voided as fraudulent conveyance; recipient has knowledge of judgment

The U.S. Court of Appeals for the Seventh Circuit recently determined that a judgment-debtor's transfer of property to a transferee with knowledge of the judgment was voidable under the Uniform Fraudulent Transfer Act. See For Your Ease Only, Inc. v. Calgon Carbon Corp., 560 F.3d 717 (7th Cir. 2009).

Though the transferee had given reasonably equivalent value to the judgment-debtor in exchange for the transfer, the court found that the transferee did not take the judgment debtor's assets in good faith because its principal knew that judgment had been entered.

USA, Insolvency & Restructuring, Litigation, White Collar Crime, Reed Smith LLP, Debtor, Fraud, Federal Reporter, Limited liability company, Default judgment, Good faith, Subpoena, Seventh Circuit