On May 25, 2012, Residential Capital LLC (“ResCap”) filed a complaint in United States Bankruptcy Court for the Southern District of New York seeking declaratory and injunctive relief to extend the automatic stay over 27 MBS lawsuits against it, its affiliates, and its executives while it undergoes bankruptcy restructuring.  ResCap alleges that all of the lawsuits against its non-debtor affiliates are inextricably connected to the debtor affiliates, and that such lawsuits will drain the debtors’ estates by forcing those entities to undergo extensive discovery and face significant indem

On May 29, 2012, the United States Supreme Court issued its much-anticipated decision in the Chapter 11 bankruptcy cases for RadLAX Gateway Hotel, LLC and its affiliate (together, the “Debtors”). The Court held that when a debtor proposes to sell a secured creditor’s collateral free and clear of the creditor’s lien pursuant to a Chapter 11 bankruptcy plan, the debtor cannot deny the creditor the opportunity to “credit bid” in the sale without cause.

In a major victory for secured creditors, the United States Supreme Court, on May 29, 2012, unanimously held that a chapter 11 plan involving a sale of secured property must afford the secured creditor the right to credit bid for the property under section 363(k) of title 11 of the United States Code (the “Bankruptcy Code”).¹ In so holding, the Supreme Court resolved the split that had emerged among the United States Circuit Courts of Appeals, as illustrated by the Seventh Circuit’s decision below,² which contrasted with recent decisions from the Third and Fifth Circui

The bankruptcy case of TOUSA, Inc. and its various subsidiaries (collectively “Tousa”) is one where lenders have seen their fortunes rise and fall. On March 15, 2012, they fell again when the Eleventh Circuit¹ (the “Circuit Court”) reversed the District Court’s opinion and reinstated the Bankruptcy Court’s order, which had disgorged over $400 million from Tousa’s senior lenders and avoided certain guarantees and liens granted to them by the Conveying Subsidiaries (defined below).

In October 2009, the court overseeing the TOUSA, Inc. bankruptcy cases in the Southern District of Florida (Bankruptcy Court) set off considerable alarm bells throughout the lending community when it unraveled a refinancing transaction as a fraudulent conveyance based upon, in primary part, the fact that certain subsidiaries of TOUSA, Inc. pledged their assets as collateral for a new loan that was used to repay prior debt on which the subsidiaries were not liable, and that was not secured by those subsidiaries’ assets.

Introduction

On March 13, 2012, Judge Richard J.

On November 18, 2011, U.S. District Judge William H. Pauley III of the Southern District of New York granted the requests of the attorneys general of New York and Delaware to intervene in the proceeding seeking approval of an $8.5 billion settlement between Bank of America Corp. and the Bank of New York Mellon, as trustee for several trusts that issued Countrywide Financial Corp.

On December 1, Bankruptcy Rule 2019 became effective.  This rule relates to the disclosure requirements in Chapter 9 and Chapter 11 cases for holders of distressed loans and eliminates the requirement for the disclosure of the price paid for a claim in bankruptcy and the date the claim was acquired (except in very limited circumstances) in Rule 2019 verified statements.  Rule 2019.

Judge Buchwald of the U.S.