On February 8, 2011, the Federal Communications Commission (FCC) entered into a Consent Decree with Turner Broadcasting Systems, Inc. (Turner) relating to Turner's failure to seek prior FCC approval before consummating an internal restructuring. The Consent Decree reminds parties that it is important to comply with all pre-approval requirements relating to the assignments or transfers of control of Commission licenses.

The United States District Court for the Northern District of Illinois, applying Illinois law, has ruled that an insolvency exclusion barred coverage for claims arising out of an insurance broker’s placement of coverage with an insolvent insurance association. American Automobile Insurance Co. v. B.D. McClure & Associates, Ltd., 2011 WL 211204 (N.D. Ill. Jan. 21, 2011).

The trading rules and conventions of the loan market are well known to its participants. Similarly, the laws and practices governing equity securities trading in the U.S. are quite familiar to securities market professionals. The opportunity for confusion may arise, however, when these two markets quickly converge—for example, when the loans of a reorganized borrower are converted into or satisfied by the issuance of equity securities.

Does this sound familiar? A newly formed entity purchases distressed bank debt after the debtor has proposed a reorganization plan. The purchaser obtains a blocking position and uses its negotiating leverage to obtain control of the plan process and ultimately the borrower’s assets, which have strategic importance to the purchaser.

In a case illustrating the effective use of a bankruptcy examiner, the examiner appointed by the court in the North General Hospital bankruptcy case has concluded that the hospital made over $3 million in unauthorized post-bankruptcy filing payments to the detriment of unsecured creditors. Prior to its bankruptcy filing, North General Hospital and certain related corporate debtors operated a hospital in the Harlem section of Manhattan.

Pursuant to § 1104 of the United States Bankruptcy Code, the court may appoint a bankruptcy examiner to investigate the debtor with respect to allegations of fraud, dishonesty, incompetence, misconduct or mismanagement. A qualified examiner, with a clearly defined mission, can drastically affect the outcome of the bankruptcy case and directly impact the return to creditors. The difference between a successful financial restructure or liquidation and an investigation yielding little value to the creditors often depends on the approach taken by the examiner and his professionals.

In November of 2010, the trustee for the Circuit City Stores, Inc., liquidating trust filed more than 500 adversary proceedings against creditors seeking the recovery of alleged preferential payments. The extent of the trustee's success in recovering these payments will impact the overall distribution to creditors. Creditors in bankruptcy cases should be aware that preference litigation allows a trustee or debtor-in-possession to recover payments received by a creditor during the period immediately preceding the bankruptcy filing.

Years ago, second lien lenders adhered to the truism about children -- they were seen but not heard. As our children have grown more vocal in recent years, so too have second lien lenders. A spate of recent bankruptcy cases demonstrate that second lien lenders have been both seen and heard at many critical junctures in the chapter 11 timeline -- at the sale of the debtor’s assets under section 363 of the Bankruptcy Code,1 in seeking the appointment of an examiner,2 when voting on a chapter 11 plan,3 and in connection with the confirmation hearing.4

The rapid evolution of a robust secondary market for claims against the three largest failed Icelandic banks provides a powerful example of the prompt adaptation of an existing secondary-market legal framework -- originally developed in the US and Europe -- to a complex and novel bankruptcy regime and trading environment.

The U.S. Bankruptcy Code provides for the appointment of a bankruptcy examiner to investigate the debtor with respect to allegations of fraud, dishonesty, incompetence, misconduct or mismanagement. The right examiner, with a clearly defined mission, will have a major influence on the bankruptcy process. The difference between a successful financial restructuring or liquidation-resulting in substantial recoveries for the key constituencies-and a time-consuming (and asset-consuming) meltdown, can depend on the approach of the examiner and the examiner's support team.