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
Would you know what to do if you learned that one of your franchisees had filed for bankruptcy? Perhaps more importantly, would you know what not to do? While each circumstance and franchise agreement is different, there is a general framework for dealing with a franchisee in bankruptcy. Here we’ll introduce some of the issues you are likely to encounter throughout the bankruptcy process.
The Automatic Stay
The United States Court of Appeals for the Fourth Circuit recently affirmed the bankruptcy court decision in the Qimonda AG chapter 15 bankruptcy case,1 providing that holders of intellectual property licenses based on U.S. patents are entitled to the special protections contained in 11 U.S.C. § 365(n).2 In so doing, the court bolstered the rights of U.S. intellectual property licensees whose agreements might otherwise be vulnerable to termination in a cross-border insolvency proceeding.
Background
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 2010, the Uniform Law Commission promulgated several amendments (Amendments) to Article 9 of the Uniform Commercial Code (Article 9) designed to address problems that have arisen since revised Article 9 went into effect in 2001. Most, but not all, of the Amendments address the proper way to reflect debtor names on financing statements.
Timing and Enactment
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.
In another recent private letter ruling,19 the IRS ruled that an ownership change pursuant to a bankruptcy reorganization plan qualified for an exception to the general rule limiting net operating loss ("NOL") carryforwards under Section 382(a).
Overview
Overview
In a major victory for secured creditors, the United States Supreme Court, on May 29, 2012, unanimously held that a chapter 11 plan involving a sale of secured property must afford the secured creditor the right to credit bid for the property under section 363(k) of title 11 of the United States Code (the “Bankruptcy Code”).1 In so holding, the Supreme Court resolved the split that had emerged among the United States Circuit Courts of Appeals, as illustrated by the Seventh Circuit’s decision below,2 which contrasted with recent decisions from the Third and Fifth Circui