In a recent opinion, JELD-WEN, Inc. v. Van Brunt (In re Grossman’s Inc.), 607 F.3d 114 (3d Cir. 2010), the United States Court of Appeals for the Third Circuit overruled its prior decision in Avellino & Bienes v. M. Frenville Co. (In re Frenville Co.), 744 F.2d 332 (3d Cir. 1984), which adopted the accrual test, a standard for determining the existence of a “claim” under the Bankruptcy Code.
In the last eighteen months, two Major League Baseball teams, the Chicago Cubs and the Texas Rangers, were sold in bankruptcy. Although both teams engaged in very similar processes leading up to their respective bankruptcy filings, the bankruptcy cases took very divergent paths.
In a decision that may come as a surprise to many, the Court of Chancery of the State of Delaware (the “Court”) recently dismissed a derivative suit brought by a creditor on behalf of an insolvent limited liability company. See CML V, LLC v. Bax et al., 6 A.3d 238 (Del. Ch. 2010)(JetDirect Aviation Holdings, LLC, Nominal Defendant).
It is well established that the automatic stay imposed under section 362 of the United States Bankruptcy Code (the “Bankruptcy Code”) in a typical bankruptcy case applies extraterritorially. Thus, creditors of a Chapter 11 debtor are generally prohibited from exercising any remedies against a debtor or its assets anywhere in the world. Up until recently, no court had addressed the scope of the stay applicable in a Chapter 15 case.
On December 21, ISDA announced that it sought and was granted permission to intervene in the Lehman Brothers International Europe case in order to ensure that the arguments reflecting the market's interpretation of Section 2(a)(iii) of the ISDA Master Agreement were made before the court. The court agreed with ISDA that Section 2(a)(iii) is "suspensive" in effect. ISDA Release.
On December 29, 2010, the Honorable Mariana R. Pfaelzer denied a motion by Stichting Pensioenfonds ABP ("Plaintiff") to remand its claims against Countrywide and others to state court. Judge Pfaelzer concluded that the case was sufficiently related to a bankruptcy case to confer federal jurisdiction in light of contractual indemnification obligations of a bankrupt originator, American Home Mortgage Corp., to Countrywide. The Court also concluded that there were no equitable grounds meriting remand.
On November 17th, Lehman Brothers Special Financing Inc. ("LBSF") and its official unsecured creditors' committee filed a joint motion to stay BNY Corporate Trustee Services Limited's ("BNY") appeal for 90 days in the "Dante" matter, pending final settlement of the dispute between LBSF and Perpetual Trustee Company Limited ("Perpetual").
On October 12, the FDIC issued a notice of proposed rulemaking for a rule clarifying how the FDIC would treat certain creditor claims under the new liquidation authority, established under the Dodd-Frank Act, for financial companies whose insolvency would pose a significant risk to the financial stability of the United States.
On September 20th, the United States District Court for the Southern District of New York granted BNY Corporate Trustee Services Limited ("BNY") leave to appeal the bankruptcy court's decision in the Lehman "Dante" matter. In its January decision, the bankruptcy court had voided certain document provisions providing for the subordination of a swap counterparty's rights to an early termination payment when the swap counterparty or one of its close affiliates went into bankruptcy. BNY holds the collateral subject to this dispute.
In a May 28, 2010 decision, Judge Alan Gold of the United States District Court for the Southern District of Florida granted a motion to dismiss claims filed against lenders on a revolving loan agreement to the Fontainebleau resort and casino project in Las Vegas. The claims were brought by two term loan lenders for the project, Avenue CLO Fund, which had provided term loan funding, and Aurelius Capital, which had acquired the interests of other term lenders following the project’s bankruptcy.