On May 10th, FDIC Acting Chairman Martin J. Gruenberg discussed the FDIC's authority to resolve failing systemically important financial institutions ("SIFIs"). Gruenberg outlined how the FDIC would implement its resolution authority, noting that it would place the institution in receivership, creating a bridge holding company for the SIFI's assets and investments. Shareholders and subordinated and unsecured creditors would be left in receivership, although some of the SIFI's debt would be converted into equity.
On April 30th, the FDIC issued a final rule that treats a mutual insurance holding company as an insurance company for purposes of Section 203(e) of the Dodd-Frank Act. The new rule clarifies that the liquidation and rehabilitation of a covered financial company that is a mutual insurance holding company will be conducted in the same manner as an insurance company.
The United States Bankruptcy Court for the Southern District of New York has lifted the automatic stay in bankruptcy to permit D&O and E&O insurers to advance or reimburse insured directors,’ officers’ and employees’ reasonable defense costs incurred in underlying litigation arising out of the insured company’s collapse. In re MF Global Holdings Ltd., et al., No. 11-15059 (MG) (Bankr. S.D.N.Y. Apr. 10, 2012)
On March 9, 2012, Susheel Kirpalani, the court-appointed examiner for Dynegy Holdings LLC (Dynegy), concluded that the debtor's transfer of certain assets to its parent company, Dynegy Inc., prior to its bankruptcy filing may be recoverable as a fraudulent transfer. Kirpalani further determined that Dynegy's board of directors breached its fiduciary duty in approving the asset transfer. Dynegy Inc. vigorously disputes the examiner's findings.
The last several years have seen bankruptcy filings from prominent retail chains such as Borders, Circuit City, Blockbuster, Movie Gallery and Ritz Camera. Many of these cases have resulted in liquidation. For commercial landlords, retail bankruptcy cases present a number of potentially damaging issues, including nonpayment of rent, assignment of the lease to an unworthy tenant, vacant space in an otherwise popular location and going-out-of business sales.
On April 5th, the Certified Financial Planner Board of Standards announced the approval of new rules regarding the disclosure of information concerning a CFP who has declared bankruptcy. CFP Board Announcement.
On March 28th, the House Oversight and Investigations Subcommittee held hearings on MF Global, whose October 2011 collapse has raised questions concerning the protection of customer money. In her prepared remarks MF Global's general counsel Laurie Ferber described the days and hours preceding the firm's bankruptcy filing, including the two wire transfers that some have seen as evidence that the firm improperly used customer money, and about which JP Morgan (the ultimate recipient of the funds), had questions.
On March 9, 2012, Susheel Kirpalani, the court-appointed examiner for Dynegy Holdings, LLC (Dynegy), concluded that the debtor's transfer of certain assets to its parent company, Dynegy, Inc., prior to its bankruptcy filing may be recoverable as a fraudulent transfer. Kirpalani further determined that Dynegy's board of directors breached its fiduciary duty in approving the asset transfer. Dynegy, Inc. vigorously disputes the examiner's findings.
The United States Bankruptcy Court for the Western District of Louisiana has held that an insured versus insured exclusion does not apply to preclude coverage for claims brought by a duly appointed bankruptcy trustee against an insolvent corporation’s directors and officers. Central Louisiana Grain Cooperative v. Vanderlick, 2012 WL 293173 (Bankr. W.D. La. Jan. 31, 2012).
Defanging Stern v. Marshall1: The United States District Court for the Southern District of New York Modifies the Reference of Bankruptcy Matters to Address Issues Resulting from the Supreme Court’s Ruling