Originally appeared in the August 2014 issue of The Bankruptcy Strategist.
stale-mate
[steyl-meyt]
noun
In its recent decision, Executive Benefits Insurance Agency v. Arkison (In re Bellingham Insurance Agency, Inc.),1 the Supreme Court reiterated and expanded on the reasoning in Stern v.
In another judicial decision springing from Lehman Brothers, as a result of the likely surplus in the estate of Lehman Brothers International (Europe) (in administration) (LBIE) after all the provable debts have been paid, Mr Justice Richards has issued a ‘statement of conclusions’ in what is called the Waterfall Application. A more detailed judgement is expected in late March 2014. We summarise the conclusions below.
Ranking and Contributions of Shareholders of Inlimited Companies
Which law firm is rumored to be failing this week, and who will be next? Although, inevitably, the target firms insist that retaining bankruptcy counsel does not mean a filing is imminent, such legal industry headlines are catnip for strong firms hoping to bolster their own talent by luring lateral hires away from weak ones. With those opportunities, however, comes the real risk of being sued later by the failed firm’s bankruptcy trustee.
The Third Circuit in In re KB Toys, Inc.1 recently affirmed a decision of the Delaware District Court, holding that trade claims are subject to disallowance under section 502(d) of the Bankruptcy Code despite their subsequent sale to a third party. This case is of particular interest to investors in distressed debt.
In bankruptcy, cramdown is one of the biggest risks that a secured creditor faces. Through the power of cramdown, a debtor (or other plan proponent) can effectively restructure the claim of a secured creditor including to extend the maturity date, reduce the interest rate or alter the timing of repayment.
There are important issues and procedures to be considered when a foreign buyer seeks to purchase the assets of a U.S. entity that is distressed or subject to a U.S. insolvency proceeding and which is involved in business activities with a nexus to U.S.
Secured creditors need to be aware of recent bankruptcy rulings that affect their rights and interests. These rulings have tested the boundaries of key concepts affecting the ability to "cramdown" and involuntarily restructure a secured creditor’s rights and the valuation of collateral. Secured creditors must therefore be mindful of these developments and risks in guiding their negotiating and litigation strategy against a cramdown threat.
On April 9, 2013, Ambac Financial Group, Inc. (“Ambac”) submitted a proposed settlement with the United States to the U.S. Bankruptcy Court for the Southern District of New York. If approved, the proposed settlement would resolve more than two years of litigation concerning the tax treatment of losses sustained by Ambac in connection with credit default swap contracts entered into during the 2008 financial crisis. The settlement would result in a payment by Ambac to the Government of $101.9 million, as well as possible future additional payments of up to $14.9 million.