Despite recent decisions in the U.S. Courts of Appeals for the Second Circuit (Momentive) and the Fifth Circuit (Ultra) questioning the enforceability of make-whole provisions in bankruptcy, on March 18, 2019, the Bankruptcy Court for the Southern District of New York determined in 1141 Realty that the make-whole provision contained in a loan agreement was enforceable notwithstanding acceleration of the loan by the secured lender.
Background on Enforceability of Make-Whole Provisions in Bankruptcy
On December 13, the U.S. Bankruptcy Court for the Southern District of Florida ruled that the operator of a computer-financing scheme cannot use his bankruptcy to discharge a $13.4 million judgment entered in 2016 for violating a 2008 FTC order.
On October 26, the U.S. District Court for the Eastern District of Wisconsin denied a plaintiff’s motion for summary judgment and instead entered judgement in favor of two creditors and two consumer reporting agencies (collectively, “defendants”), holding that the debtor failed to show a factual inaccuracy in the credit reporting of a debt.
On November 8, a federal jury for the U.S. District Court for the District of Minnesota awarded the ResCap Liquidating Trust, the post-bankruptcy successor-in-interest to Residential Funding Company, LLC (RFC), a $27.8 million verdict in an indemnity case against a correspondent lender.
On July 27, the U.S.
The government action bar provides that a relator may not bring a False Claims Act (FCA) lawsuit “based upon allegations or transactions which are the subject of a civil suit or anadministrative civil money penalty proceeding in which the Government is already a party.” 31 U.S.C. § 3730(e)(3) (emphasis added). Recently, in Schagrin v. LDR Industries, LLC, No. 14 C 9125, 2018 WL 2332252 (N.D. Ill.
On June 29, the FDIC and Federal Reserve issued (here and here) a joint request for public comment on proposed revisions to resolution plan guidance for the eight largest and most complex U.S. banks.
On May 25, 2018, the U.S. Court of Appeals for the Second Circuit affirmed a district court decision finding that producer Sabine Oil and Gas Corp. could reject certain midstream gathering contracts in its bankruptcy case.i
On May 17, the Colorado Court of Appeals held that an attorney fees award imposed under the Colorado Consumer Protection Act (CCPA) is a civil penalty and is not dischargeable under the Bankruptcy Code.
On May 16, the Federal Housing Administration (FHA) released Mortgagee Letter ML 2018-03 (ML 2018-03), which extends the 180-day foreclosure moratorium on FHA-insured properties in Puerto Rico & the U.S. Virgin Islands affected by Hurricane Maria for an additional 90 days. As previously covered by InfoBytes, in March, FHA extended the moratorium an additional 60 days to May 18.