Make whole premiums sound simple; they are prepayment premiums that are supposed to “make you whole.” More precisely, make whole premiums are intended to protect noteholders (or other debt holders) from the loss of future fixed coupon interest payments due to the early repayment of debt if market interest rates have declined in the interim.

Judge Gold of the United States District Court for the Southern District of Florida entered an Order today granting the motions of the First and Second Lien Lenders (the Lien Lenders) to intervene in the appeal involving the Transeastern Lenders to the 11th Circuit Court of Appeals (the Transeastern Appeal). In so doing, Judge Gold accepted the proposition that the 11th Circuit’s decision on the issue of reasonably equivalent value (the REV Issue) would bind the Lien Lenders.

In Canada, as in the US, corporate debtors are permitted with court approval to obtain DIP financing on a super-priority basis. The Order typically provides protections as hard as a nutshell, including that pension claims cannot crack the shell of protection and are subordinated to the new DIP loan. A recent Canadian decision, however, held that certain pension claims could crack the nut wide open and should be paid ahead of a DIP loan. Re Indalex Limited, 2011 ONCA 265 (Apr. 7, 2011).

The Executive Office of the United States Trustee, part of the Department of Justice, has embarked on an initiative to investigate bankruptcy-related practices of the major mortgage servicers. The United States Trustees have not identified any authority to conduct an investigation beyond specific matters pertaining to individual debtors or their estates.

MERS’s authority to assign mortgages was called into question by a bankruptcy court in New York. In re Agard, 2011 Bankr. LEXIS 488 (Bankr. E.D.N.Y. Feb. 10, 2011). In response to the servicer’s motion for relief from the automatic stay, the debtor challenged the servicer’s standing on the ground that MERS lacked the authority to assign the mortgage to the servicer. Because a state court had previously entered a judgment of foreclosure and sale in favor of the servicer, the court was compelled by the Rooker Feldman doctrine to reject the debtor’s claims.

Last month we reported on the overwhelming victory of the Transeastern Lenders in their appeal of the decision by the United States Bankruptcy Court for the Southern District of Florida ordering them to disgorge almost $500 million in loan repayments, pre- and post-judgment interest and professional fees (“TOUSA I“1). That update can be found here.

Lehman Brothers Special Financing Inc.’s pending appeal against the judgments of the UK High Court and the Court of Appeal in the so called “flip clause cases”, concerning the enforceability of flip clauses, is scheduled to be begin with Belmont Park Investments Pty Limited (Belmont Park Investments Pty Limited v BNY Corporate Trustee Services Limited and Lehman Brothers Special Financing Inc (UKSC 2009/0222)) on March 1, 2011.

On 6 January 2011, the European Commission (the “Commission”) published a consultation paper on the technical details of a possible EU framework for bank recovery and resolution (the “Consultation Paper”).1 The paper follows the communication from the Commission dated 20 October 2010 on an EU framework for crisis management in the financial sector (the “Communication”).2

A degree of certainty—for the time being—has been restored for participants in the commercial lending and debt trading markets who have been tracking the appeal of a controversial 2009 fraudulent transfer decision in the TOUSA, Inc. bankruptcy case.i On February 11, 2011, Judge Gold of the United States District Court for the Southern District of Florida quashed (or nullified)ii the bankruptcy court’s decision, which ordered a group of lenders to disgorge $480 million received in connection with loans they extended to a joint venture involving TOUSA, Inc.

In a 113-page decision issued on February 11 (the "District Court Decision"), the United States District Court for the Southern District of Florida (Gold, J.) delivered a blistering rebuke to the Florida Bankruptcy Court (Olson, J.) when it quashed the portions of the famous / infamous 2009 TOUSA decision (the "Trial Decision") holding the so-called "Transeastern Lenders" liable for fraudulent transfers in connection with T