In re WL Holmes LLC, ___ Fed. Appx. ___, 2013 WL 4019397 (3rd Cir 2013)
CASE SNAPSHOT
Bankruptcy Judge Steven Rhodes ruled from the bench on December 3, 2013 (followed by a written opinion on December 5, 2013) that Detroit is eligible for bankruptcy protection, allowing the city to attempt to restructure $18.5 billion of debt. Thus begins the largest American municipal bankruptcy case. After nine days of trial, the judge ruled that although the city did not negotiate in good faith prior to bankruptcy, it was impossible for the city to do so.
CASE SNAPSHOT
In the matter of the Nortel Companies, the UK Supreme Court found that pension liabilities attributed to a company that arose prior to the occurrence of an insolvency event were not entitled to priority treatment, even if the first demand for payment was only made after the insolvency event occurred.
FACTUAL BACKGROUND
The Pension Act
CR&B Alert
Commercial Restructuring & Bankruptcy News
In This Issue:
• Consequences of the Failure of a Secured
Creditor to File a Timely Proof of Claim—2
• Private Equity Funds Potentially Liable for
Portfolio Company’s Unfunded Pension
Liability—2
• Make-Whole Payment Not ‘Unmatured
Interest’—3
• Tax Status of Q-Sub Debtor Not Estate
Property; Debtor Has No Standing to Challenge
Parent’s Sub-S Revocation—3
• Don’t Let Excess Insurers Avoid Coverage
Based on Settlements or Bankruptcy—4
When a franchisee files for bankruptcy, a franchisor naturally has concerns over how the process will affect the parties’ relationship. Of particular concern is the possibility that the franchisor will be forced into a relationship with an unacceptable successor as a result of a bankruptcy judge’s decision to authorize assumption and assignment of the franchise agreement over the franchisor’s objection.
An updated Statement of Insolvency Practice (SIP) relating to pre-packaged sales in administrations has been issued by the Joint Insolvency Committee, effective from 1 November 2013. The new SIP aims to provide greater clarity for creditors, with insolvency practitioners (IPs) having to provide earlier notification of the pre-packaged sale and more detail as to the circumstances surrounding, and terms of, the sale transaction.
When businesses pay for goods and services, they generally like to receive them. Unfortunately, as any bankruptcy lawyer will tell you, this consistent desire is not matched by uniform experience.
Another day, another CMBS transaction declares an insolvency related event of default (after the REC6 default), this time based on the ‘balance sheet’ event of default.
The United States District Court for the Northern District of Texas has held that underlying claims that the insureds misused investment funds intended for the purchase of nonperforming mortgages did not allege negligent acts, errors, or omissions in performing “mortgage broker services” within the policy’s definition of “Insured Services.” Axis Surplus Ins. Co. v. Halo Asset Mgmt., LLC, 2013 WL 5416268 (N.D. Tex. Sept. 27, 2013).