As many are already aware, the City of Harrisburg, Pennsylvania filed a Chapter 9 bankruptcy late Tuesday evening, October 11 in advance of a Pennsylvania state senate vote that may have put the city on the path to a receivership.  The Chapter 9 petition (http://www.publicfinancematters.com/Harrisburg%20Petition%20.pdf) is the result of a 4-3 vote “authorizing” the filing by the Harrisburg city council without the support of Harrisburg’s Mayor Linda Thompson.  Pr

The United States District Court for the Southern District of Ohio, applying Ohio law, has held that a dishonesty exclusion barred coverage under primary and excess directors and officers (D&O) policies for the Wrongful Acts of the principals of a bankrupt company, all of whom were criminally convicted of securities fraud and related crimes.  The Unencumbered Assets Trust v. Great American Insurance Co., et. al., 2011 WL 4348128 (S.D. Ohio Sept.

In a decision that may have implications for holders of community development district bonds and other similar “dirt bonds,” a Florida bankruptcy court has ruled that holders of community development district bonds do not always have plan voting rights when the underlying developer — as opposed to the development district itself — is the bankruptcy debtor.

The United States Bankruptcy Court for the District of Delaware, applying federal law, has held that certain lawsuits brought by a bankruptcy trustee were related claims, even though they alleged unique causes of action, because they were based upon the same course of conduct.  The court also found that the trustee was pursuing claims both on behalf of the policyholder-debtor and its subsidiaries, and therefore the application of the insured versus insured exclusion was “unclear.”  Nonetheless, the court found that the individual insureds were entitled to 100% of their defense cos

Following California-based solar manufacturer Solyndra’s announcement August 31 that it intends to file for bankruptcy, House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Oversight Subcommittee Chairman Cliff Stearns (R-TX) requested more documents from the White House regarding the Department of Energy’s $535 million loan guarantee to the company, the first to be awarded in September 2009. The bankruptcy is likely to intensify congressional criticism of the agency’s loan guarantee program and other renewable energy subsidies.

An Illinois appellate court, applying Indiana and federal law, has held that neither a bankruptcy exclusion nor an insured versus insured exclusion applied to bar coverage for claims brought by a bankruptcy trustee.  Yessenow v. Exec. Risk Indem., Inc., 2011 WL 2623307 (Ill. App. Ct. June 30, 2011).

The Appellate Court of Illinois, First District, Third Division, applying Indiana and federal law, has held that neither a bankruptcy nor an insured versus insured exclusion applied to bar coverage for claims brought by a bankruptcy trustee.  According to the court, the bankruptcy exclusion is unenforceable because coverage arises from a policy that is a property interest of the debtors, and that property interest is protected under Section 541 of the Bankruptcy Code.  The insured versus insured exclusion did not apply, the court held, because the policyholder and a court-appointe

The United States District Court for the Central District of California has granted motions by eight directors and officers liability insurers to withdraw the reference to the bankruptcy court of two coverage actions involving coverage for claims against former directors and officers of a bank holding company.  In re IndyMac Bancorp, Inc., Nos. CV11-02600; CV11-02605; CV11-02950; CV11-02988 (C.D. Cal. May 17, 2011).  Wiley Rein LLP represents an excess insurer and the primary Side A insurer in the litigation.

Since it was issued three years ago by the Ninth Circuit Bankruptcy Appellate Panel, the Clear Channel decision (Clear Channel Outdoor, Inc. v. Knupfer (In re PW, LLC), 391 B.R. 25 (9th Cir. B.A.P. 2008)) has been widely criticized as “an aberration in well-settled bankruptcy jurisprudence.” Before Clear Channel, conventional wisdom (and what most people perceived to be the law) supported the notion that a bankruptcy sale order that contained a good faith finding under Section 363(m) could not be disturbed on appeal.

In a decision that may have significant practical implications to the practice of bankruptcy law, the U.S. Supreme Court recently declared, on constitutional grounds, that a bankruptcy court cannot exercise jurisdiction over a debtor’s state law counterclaims, thus considerably limiting the ability of the bankruptcy court to fully and finally adjudicate claims in a bankruptcy case. Stern v. Marshall, No. 10-179 (June 23, 2011).