Section 503(b)(9) of the Bankruptcy Code, which was added to the Code pursuant to the Bankruptcy Abuse Prevention and Consumer Protection Ace of 2005 ("BAPCPA"), creates an administrative claim in favor of pre-petition suppliers of goods under certain circumstances. From the time of its enactment, courts and practitioners have sought clarity regarding the correct interpretation of key elements of this section of the Code. This article examines the concept of the date of "receipt" of goods for purposes of §503(b)(9).

The chronology in many successful Chapter 11 cases is for the debtor to confirm its plan of reorganization, and then turn its attention to recovering preferential transfers of money or property made in the 90 days (or 1 year for insiders of the debtor) before the bankruptcy filing. This article explores the duty to provide information in the plan about possible preference actions, and the level of disclosure necessary to preserve them.

Can the owners of a company retain their equity interests in a Chapter 11 reorganization plan? The answer to this question is often critical in determining whether a Chapter 11 bankruptcy proceeding is a desirable option for the company's owners. If the company is unable to pay its creditors in full, then the absolute priority rule prohibits owners from retaining their interests under a reorganization plan unless the owners contribute new value to the business that is both substantial and essential to the company's reorganization efforts.

The United States Bankruptcy Court for the Eastern District of New York held that it had subject matter jurisdiction over a bankruptcy trustee’s adversary proceeding against the bankrupt entity’s insurer because the policy and policy proceeds were part of the policyholder’s bankruptcy estate.  EMS Financial Services, LLC. v. Federal Ins. Co., 2013 WL 64755 (Bankr. E.D.N.Y.  Jan. 4, 2013).

Applying California law, a California appellate court has held, in an unpublished opinion, that a judgment for reimbursement against an insured law firm was properly amended to name the sole equity partner of that law firm in light of his “pervasive” involvement in the underlying litigation and coverage litigation and his direction of such litigation in light of the fact that he knew the law firm was dissolved and had no assets.  Carolina Cas. Ins. Co. v. L.M. Ross Law Group LLP, 2012 WL 6555545 (Cal. Ct. App. Dec. 17, 2012). 

The United States District Court for the Eastern District of California, applying California law, has concluded that it should exercise jurisdiction under the federal Declaratory Judgment Act to determine the availability of coverage for a written demand and has held that the related coverage action should not be stayed in favor of potential future underlying litigation between the Federal Deposition Insurance Corporation (FDIC) and the insureds because the outcome of the coverage litigation would not be dependent on resolution of disputed facts in such a future action.  Progressiv

DRI- The Voice of the Defense Bar

The ability of secured creditors to credit bid in sales conducted under bankruptcy plans of reorganization is an important right that protects them against low bids from rival purchasers. A secured creditor is typically permitted to offset, or bid, its secured allowed claim against the purchase price in a sale of collateral conducted under section 363(b) of the United States Bankruptcy Code.

The United States District Court for the Eastern District of Virginia, applying Texas law, has held that a settlement agreement resolving coverage litigation released the insurer’s obligation for defense costs for certain claims tendered for coverage under a subsequent policy.  Nat’l Heritage Found., Inc. v. Philadelphia Indem. Ins. Co., 2012 WL 5331570 (E.D. Va. Oct. 25, 2012).

The United States Bankruptcy Court for the District of Nebraska has held that an insurer may make settlement payments for claims against a debtor’s directors and officers where any claims of the debtor are subordinate to those of the directors and officers under the terms of the policy.  The court stated that under these circumstances “the issue of whether the policies are property of the bankruptcy estate is irrelevant.”  In re TierOne Corp., 2012 WL 4513554 (Bankr. D. Neb. Oct. 2, 2012).

Commercial real estate foreclosures present a number of significant challenges to lenders, special servicers and their counsel that residential foreclosures do not.  But residential foreclosures make up the vast majority of state courts’ foreclosure dockets, so the court system – including Judges and Master Commissioners – is often unfamiliar of the challenges associated with commercial foreclosures.  This can result in delays, unnecessary expense and the associated frustration that invariably follows when a commercial real estate asset is tied up in Court.