This is the second in a series of Alerts regarding the proposals made by the American Bankruptcy Institute’s Select Commission to Reform Chapter 11 Business Bankruptcies. It covers the Commission’s recommendations about the paying of “critical vendors” and other unsecured creditors at the very beginning of a bankruptcy case. The Commission’s recommendations are set forth below. For copies of this Alert, or the prior article about the Commission’s recommendations regarding secured lenders, please contact any BakerHostetler bankruptcy attorney.
Congress rarely accomplishes anything these days, but the need to reform Chapter 11 of the Bankruptcy Code seems to have “crossed over the aisle.” When the Bankruptcy Code was enacted in 1978, America boasted the world’s dominant manufacturing economy. Corporate debt was mostly unsecured trade debt. Secured loans provided tangible asset financing for property, plant, and equipment.
On March 16, 2015, the Spanish subsidiary of Banca Privada d’Andorra, Banco de Madrid, sought bankruptcy protection in the midst of a run on the bank by depositors. The run and bankruptcy were the result of FinCEN’s March 10, 2015, announcement that it would bar U.S. banks from providing correspondent banking services to Banca Privada d’Andorra or any bank that processes transactions for Banca Privada d’Andorra.
One deliberately ironic facet of the 2004 film Howard Hughes bio-pic The Aviator (the one with Leonardo DiCaprio) is the fact that the airlines fighting for world dominance in the 1940s were Howard Hughes’ TWA and Juan Trippe’s Pan Am. By the time of the movie, of course, both famous airlines were gone. Pan Am’s final descent into bankruptcy court ended in 1991. Following its own troubles (and two bankruptcies in the 1990s), TWA was acquired by American Airlines in 2001. But does the death of an airline mean an end to litigation? Of course not.
The health of the healthcare industry can be summarized as follows: as go federal reimbursement rates, so goes the financial viability of healthcare providers, whether hospitals, nursing homes or medical practices.
Finds Bankruptcy Court to be Proper Forum for Claim Objection Despite Forum Selection Clauses in Investor Agreements
The Southern District of New York recently reiterated the critical difference between creditor claims and equity interests in the bankruptcy context. In a recent opinion arising out of the Arcapita Bank bankruptcy case, the Court was faced with an objection to a proof of claim filed by an investor, Captain Hani Alsohaibi, who characterized his right to recovery against the debtors as being based on a “corporate investment.”
On June 4, 2014, the New York Court of Appeals will hear arguments arising from the bankruptcies of two law firms—Thelen and Coudert Brothers—as to whether the former partners of the bankrupt law firms must turn over profits earned on billable-hour client matters they brought to their new firms.
Following recall notices for its ignition switches in February 2014, General Motors, LLC (“New GM”) has been hit with at least 50 class actions and two individual suits in not less than 20 federal and two state courts asserting claims against New GM for defective vehicles and parts sold by Motors Liquidation Company, formerly known as General Motors Corporation (“Old GM”).
On April 17, 2014, the United States Bankruptcy Judge Sean H. Lane issued an opinion in the Waterford Wedgwood bankruptcy discussing at length one of the defenses available to preference defendants. The opinion turns upon the scope of “ordinary business terms,” the objective prong of the ordinary course of business defense.
A recent opinion out of the United States Bankruptcy Court for the Eastern District of Virginia (Richmond Division) serves as a reminder to secured creditors to steer clear of conduct that a bankruptcy court may deem inequitable and provide the court with cause to limit the secured creditor’s credit bid rights. In In re The Free Lance-Star Publishing Co.