On May 5, 2016, SRC Liquidation, LLC International Holdings, LLC (“Liquidating Debtor”), filed approximately 137 complaints seeking the avoidance and recovery of allegedly preferential and fraudulent transfers under Sections 547 and 550 of the Bankruptcy Code. The Liquidating Debtor also seeks to disallow claims of such preference defendants under Sections 502(d) and (j) of the Bankruptcy Code.
A recent unpublished decision, Strunck v. Figueroa, serves as a not-so-gentle reminder that sometimes an enforcement application can be “too little, too late,” and that it is imperative to be proactive to protect your rights under a divorce decree or agreement, especially when your adversary acts in bad faith. In Strunck, a 2011 divorce decree awarded the plaintiff $23,369, which was to be transferred from the defendant’s retirement account. Before the plaintiff could act to collect the $23,369, however, the defendant withdrew the money from the retirement account.
Because no recent opinions have been published by the Delaware Bankruptcy Court, I wanted to touch on a subject that is vital in nearly every preference or fraudulent transfer case: The Statute of Limitations For A Preference Claim
A. Statute of Limitations
On May 1, 2016, BIND Therapeutics, Inc., and affiliated companies (“Debtors” or “BIND”) voluntarily filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code.
The filing comes days after the Cambridge, Mass., company received a notice of default from lender Hercules Technology III LP, which demanded immediate payment of the $14.5 million the lender says it is owed under the loan. The Company is backed by Koch Industry Inc.’s David Koch.
– But they weren’t as oppressive as my subject line may imply.
In a 13 page decision, released April 22, 2016, Judge Gross of the Delaware Bankruptcy Court granted a motion to dismiss an adversary proceeding and sanctioned the Plaintiff – disallowing any further litigation against the defendants in the Bankruptcy Court. Judge Gross’ opinion is available here (the “Opinion”).
Recently in the Abengoa SA bankruptcy proceeding (click here to review prior post), the United States Bankruptcy Court for the District of Delaware entered an order permitting Debtors to reject certain nonresidential real property leases (the “Rejection Order”).
On September 18, 2015, Margaret M. Okamoto (“Plaintiff”) filed a complaint (the “Complaint”) in The United States District Court for the District of Nevada alleging violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (the “FCRA”), against, inter alia, Bank of America, N.A. (“BOA”), Mutual of Omaha Bank (“MOB”), and Experian Information Solutions, Inc. (collectively, “Defendants”). See Okamoto v. Bank of America et al., No. 2:15-cv-01800-GMN-GWF (Sept. 18, 2015).
In the bankruptcy context, effectively appealing an order confirming a debtor’s plan of reorganization is not always a sure bet, as a court may refuse to entertain the appeal in the name of equitable mootness. Equitable mootness – “a judge-made abstention doctrine that allows a court to avoid hearing the merits of a bankruptcy appeal because implementing the requested relief would cause havoc”
Recently, U.S. Customs and Border Protection (CBP) took a new, creative tack in a long struggle with importers regarding application of the “deemed liquidation” statute, 19 U.S.C. § 1504, to entries subject to antidumping and countervailing duties (AD/CVD). Importers need to be aware that CBP is now taking the dubious position that it is entitled to “reliquidate” a “deemed liquidated” entry at any time, so long as it gives notice to the importer of the “deemed liquidation” and then reliquidates the entry within 90 days after the date of the notice.
Section 546(e) of the Bankruptcy Code offers a strong defense for holders of bonds, notes and other securities to preference and fraudulent transfer actions brought in bankruptcy proceedings. Essentially, any payment made to settle or complete a securities transaction, including repurchases and redemptions of bonds, notes and debentures, is protected from avoidance under the Bankruptcy Code. For many years, however, this powerful defense was rarely used. When the defense was raised, it was usually in the context of protecting payments made in leveraged buy-outs.