Disgruntled debtors seeking to evade their obligations by filing fraudulent liens soon face new threats under Illinois law. On July 25, 2012, Governor Patrick Quinn approved and signed Senate Bill 1692, which is intended to provide additional remedies for wrongfully filed UCC liens^.5 Senate Bill 1692 becomes effective January 1, 2013 and will be incorporated into section nine of the Illinois Uniform Commercial Code. 

The administrator for the longstanding schemes of arrangement for the insolvent London Market "KWELM companies" (Kingscroft Insurance Company Limited, Walbrook Insurance Company Limited, El Paso Insurance Company Limited, Lime Street Insurance Company Limited, and Mutual Reinsurance Company Limited), is finally preparing to wrap up. Walbrook and El Paso previously paid all outstanding claims. On September 30, 2012, the remaining three KWELM companies declared their ultimate dividend percentages and sent final "top-up" payments for agreed claims to scheme creditors.

On September 6, 2012, the National Credit Union Administration Board (NCUA) sued UBS in the United States District Court for the District of Kansas.  The NCUA filed the suit in its capacity as Liquidating Agent of U.S.

In 2012, several judicial opinions have reminded directors, officers and “responsible persons” that personal liability may be imposed for business taxes. See our alert from June 20, 2012. Responsible persons are reminded again that not only will authorities impose liability for unpaid taxes of a business on individuals but that the imposition of such taxes may not be dischargeable in bankruptcy.

In Notice 2012-39 (the “Notice”), the IRS issued guidance announcing its intention to issue regulations with respect to certain transfers of intangible property by a U.S. corporation to a foreign corporation in a reorganization described in section 361 of the Internal Revenue Code (the “Code”), citing significant policy concerns involving certain intellectual property transfers that permit U.S. persons to repatriate earnings without U.S. income taxation. The IRS’ position in the Notice will impact repatriation planning strategies.

Background

On August 10, the FDIC in its capacity as receiver for Colonial Bank filed five lawsuits – three in Alabama state court, one in New York federal court, and one in California federal court – seeking $741 million in damages from a number of investment banks, including Bank of America Corp., JPMorgan Chase & Co., Citigroup, Inc., and others, for making allegedly false and misleading statements that induced Colonial Bank into buying mortgage-backed securities.

The Department of Education (DOE) and the CFPB are pushing Congress to make it easier for students to discharge student debt issued by private lenders by filing for bankruptcy protection. The recommendations of the DOE and CFPB would not affect the majority of student debt, which is issued by the federal government, because federal loans already offer leniency in the form of deferrals, forbearance or more flexible payment options. No such cushion exists for private loans.

On August 2, 2012, the United States Court of Appeals for the Fifth Circuit issued a decision in the bankruptcy case for MBS Management Services, Inc. (the “Debtor”). The Fifth Circuit affirmed the district court’s opinion finding that an electric requirements agreement was a “forward contract” and, therefore, that payments made on the agreement were exempt from avoidance under the Bankruptcy Code.

I. Factual Background

The U.S. Court of Appeals for the Third Circuit ruled on May 1, 2012 that a provision of the U.S. Bankruptcy Code allowing the assignment of insurance policies as part of a bankruptcy reorganization overrides the anti-assignment clause of an insurance policy.  In re: Federal-Mogul Global Inc., No.

On May 29, 2012 the United States Supreme Court ruled that a plan of reorganization may not be confirmed over the objection of a secured creditor if the plan provides for the sale of collateral free and clear of the creditor’s lien, but does not permit the creditor to credit bid at the sale. The ruling resolved a conflict between a decision from Seventh Circuit Court of Appeals, which denied confirmation of such a plan, and decisions from the Third and Fifth Circuit Courts of Appeal, which approved such plans.