On Sunday, May 1st, Energy Future Holdings Corp. (“EFH”) filed a new joint chapter 11 plan of reorganization and disclosure statement (the “New Plan”) after plans to fund EFH’s exit from bankruptcy by selling its Oncor power distribution business failed.

BACKGROUND

On January 1, 2016, the Uniform Voidable Transactions Act (UVTA) was enacted in Kentucky and can be found at KRS 378A.005 e seq.  The UVTA replaces KRS 378, which contained KRS 378.010, the Kentucky fraudulent conveyance statute, and KRS 378.060, the Kentucky preference statute.  Nationally, the UVTA will replace the Uniform Fraudulent Transfer Act (“UFTA”).  According to the Conference of Commissioners on Uniform State Laws, California, Georgia, Idaho, Minnesota, New Mexico, North Carolina, and North Dakota have joined Kentucky in enacting the UVTA. 

In the high-profile bankruptcy case of Energy Future Holdings Corp. (“EFH”) a Delaware bankruptcy court recently called into question reliance on structural subordination as a way to protect a borrower’s assets from satisfying claims against an affiliated company. In the EFH bankruptcy case, holders of unsecured PIK notes issued by EFH subsidiary Energy Future Intermediate Holdings Company LLC (“EFIH”) sought to collect post-petition interest at the rate stated in the notes issued by EFIH.

Much has been written of late about data breaches and the liabilities for the unauthorized acquisition of Personally Identifiable Information (PII) from institutions, including financial institutions. But what about when the alleged “breach”--the release of information --is voluntarily and/or legally compelled? What are the risks for creditors who take collateral, in security for the repayment of debt, containing PII data? What are the risks to businesses when they transfer assets that include PII? What liabilities do they face? What are the rights of customers?

Much has been written of late about data breaches and the liabilities for the unauthorized acquisition of Personally Identifiable Information (PII) from institutions. But what about when the alleged “breach”--the release of information --is voluntarily and/or legally compelled? What are the risks to businesses when they sell assets that include PII? What liabilities do they face? What are the rights of customers?

Radio Shack – The pioneer of PII data collection

An important battle about the place of secured lending in the United States economy is set to begin. When the battle ends, fundamental assumptions about the expected recovery rates for defaulted secured loans may change.

On Monday, we released three new research indices tracking distress in U.S. financial markets.   

The indices use Chapter 11 bankruptcy filing data to signal underlying financial distress which may not be reflected in broader stock market averages.  The indices and the full quarterly report can be found at www.distressindex.com.

The “FBT/TrBK Distress Indices” comprise three different measurements based on Chapter 11 filings:

It has not taken long for another bankruptcy court to question the propriety of allowing secured creditors to credit bid their loans. You may recall that in the case of Fisker Automotive Holdings, Inc., et al. a Delaware bankruptcy court limited a creditor’s ability to credit bid based on self-serving testimony from a competing bidder that it would not participate in an auction absent the court capping the secured creditor’s credit bid.

In a recent decision that has captured the attention of the U.S. secondary loan market, the United States District Court for the Western District of Washington starkly concluded that hedge funds “that acquire distressed debt and engage in predatory lending” were not eligible buyers of a loan under a loan agreement because they were not “financial institutions” within the Court’s understanding of the phrase.

A recent decision in the bankruptcy case of Fisker Automotive Holdings, Inc., et al. has called into question a long-held belief that secured creditors hold dear: that debt purchased at a discount can nonetheless be credit bid at its full face amount at a collateral sale. While it remains to be seen how other courts will interpret Fisker, this decision has the potential to restrict participation in Bankruptcy Code section 363 sales and dampen liquidity in the robust secondary markets.