Today, the Supreme Court of the United States issued its much awaited decision in RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. ______ (2012). The noteworthy decision resolves any uncertainty surrounding a secured creditor’s right to credit bid in a sale under a chapter 11 plan which arose after cases like Philadelphia Newspapers 599 F.3d 298 (3d Cir. 2010) curtailed the right.
On May 15, 2012, the United States Court of Appeals for the Eleventh Circuit held that security interests and liens granted by subsidiaries of a borrower to refinance obligations owed to the borrower’s lenders constituted fraudulent transfers under section 548(a)(1) of the Bankruptcy Code in the borrower’s and subsidiaries’ bankruptcy cases.Senior Transeastern Lenders v. Official Committee of Unsecured Creditors (In re TOUSA, Inc.), 2012 WL 1673910 (11th Cir. 2012).
TOUSA involved one of the largest fraudulent transfer litigations in bankruptcy history. The Bankruptcy Court agreed with the Unsecured Creditors’ Committee that both the so-called “New Lenders” and the “Transeastern Lenders” received fraudulent transfers as part of a July 31, 2007 financing transaction. The District Court reversed in a scathing opinion, but today the 11th Circuit Court of Appeals has reversed the District Court and reinstated the Bankruptcy Court’s opinion in its entirety. The opinion can be found
On May 11, 2012, the U.S. Court of Appeals for the Seventh Circuit issued a decision in BMD Contractors, Inc. v. Fidelity and Deposit Company of Maryland (No. 11-1345), affirming a lower court summary judgment in favor of a surety on a payment bond.
The United States Bankruptcy Court for the Central District of Illinois recently held that an Illinois mortgage is subject to avoidance in bankruptcy pursuant to 11 U.S.C. § 544(a)(3) unless the mortgage contains among other things, (i) the amount of the debt, (ii) the maturity date of the debt, and (iii) the underlying interest rate. Richardson v. The Gifford State Bank (In re Crane), Adv. Pro. No. 11-9067 (Bankr. C.D. Ill.).
On March 13, 2012 the Queen of Hearts in the Fifth Circuit Court of Appeals showed no sympathy for the White Rabbit’s plight and denied a creditor’s appeal of an order disallowing its late filed proof of claim in the DHL Master Land Holding LLC bankruptcy case.1
In their study published in February's issue of The Quarterly Journal of Economics, “Long-Run Impacts of Unions on Firms: New Evidence from Financial Markets, 1961–1999,” Princeton University Professor David Lee and University of California Professor Alexandre Mas estimated that an “average union effect on the equity value of the firm equivalent to $40,000 per unionized worker.” The professors noted that the loss was a combination of a transfer of wealth to workers and inefficiencies caused by the unions.
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On Feb. 29, 2012, a Michigan citizens’ group opposed to the State of Michigan’s emergency financial manager law (officially entitled “Local Government and School District Fiscal Accountability Act,” MCL §§ 141.1501 et seq. and referred to herein as the “Act”), filed petitions to place the issue of the Act’s rejection on the state ballot in November.
A proposed bill entitled the Nonrecourse Mortgage Loan Act and recently introduced to the Senate for the State of Michigan would regulate the use and enforceability of certain loan covenants in non-recourse commercial transactions. Presumably, the bill, Senate Bill No. 992 introduced on Feb. 29, 2012 and referred to the Committee on Economic Development, is in reaction to a recent decision of the Michigan Court of Appeals finding a guarantor liable for a deficiency claim notwithstanding the non-recourse nature of the loan. See Wells Fargo Bank, NA v. Cherryland Mall Ltd.
Bankruptcy Courts may be courts of equity, but a recent decision by the United States District Court for the Southern District of New York holds that even equity can’t trump the plain words of a settlement agreement.