The Bottom Line

The Bottom Line

The Bankruptcy Court for the District of New Jersey denied the Debtors’ request for approval of a sale of property free and clear of liens encumbering the property. The court determined that the term “value” in section 363(f)(3) of the Bankruptcy Code referred to the face value of all liens on the property and not the “economic value”. Because the value of liens encumbering the property in this case exceeded the proposed sale price, the property could not be sold free and clear of all liens pursuant to section 363(f)(3).

A petition was recently filed in the High Court on behalf of two companies, Regan Development Limited (“Regan”) and McGettigan Limited (“McGettigan”) seeking the protection of the court pursuant to the Companies Act 2014 (the "Act"), and the appointment of an Examiner. Regan owns and operates the Regency Hotel on the Swords Road in Dublin and McGettigan owns and operates a licensed premise on Queen Street, Dublin 7 and four retail units in Bray, Co. Wicklow. On presentation of the petition the Court appointed Neil Hughes of Baker Tilly Hughes Blake as Interim Examiner.

In mortgage arrears cases separated couples have caused difficulties, in particular where one spouse has washed their hands from dealing with any debt. A recent High Court ruling has provided clarity in this area in relation to the Personal Insolvency Acts 2012-2015 and a secured creditor's position in relation to the non-engaging spouse.

The Bottom Line

In a recent ruling, Trusa v. Nepo(Del. Ch. April 13, 2017), consistent with prior case law, Vice Chancellor Montgomery-Reeves of the Delaware Chancery Court held that a creditor cannot bring a derivative action against a Delaware limited liability company, even where the company is clearly insolvent. The ruling is interesting, because in the well-known case of North American Catholic Educational Programming Foundation, Inc. v. Gheewalla, 930 A.2d 92 (Del.

In a short decision, In re that Certain Indenture Date as of April 1, 2010 (MN Ct. App. April 3, 2017), the Court of Appeals of Minnesota recently addressed a challenge to the award of trustee fees and legal expenses brought by a municipal bondholder.

Part 1 of this series described the recent decision of the ISDA Americas Determinations Committee to declare that a “failure to pay” had occurred with respect to iHeartCommunications Inc., notwithstanding that the only non-payment had been to a wholly owned subsidiary. The non-payment was orchestrated to avoid a springing lien that would have been triggered had all the notes of a particular issue of iHeartCommunications debt been paid in full. It did not reflect on the creditworthiness of iHeartCommunications.

A recent decision by the U.S. District Court for the Southern District of New York in Cumulus Media Holdings Inc. v. JP Morgan Chase Bank, N.A. (SDNY Feb. 24, 2017) found that a proposed refinancing that was consented to by the company’s revolving credit lenders nevertheless violated the negative covenants in the company’s Credit Agreement.

The Proceedings

As the saga of the Paragon Offshore plc bankruptcy (Bankr. D. Del., No. 16-10386 (CSS)) continues, it is useful to reflect upon Judge Sontchi’s denial of confirmation of its bankruptcy plan last November. In a 70-page ruling examining the feasibility of the plan in detail, Judge Sontchi concluded that the plan proposed by the debtors was not feasible because their business plan was not reasonable, and Paragon would not be able to refinance its debt in 2021 at maturity. Balance sheet solvency upon exit was not prioritized in the court’s analysis.