No doubt by now, every creditor knows of the new protections given to employees in the face of a company’s insolvency as a result of the enactment of the Wage Earner Protection Program Act (“WEPPA”) and related amendments to the Bankruptcy and Insolvency Act (“BIA”) on July 7, 2008.
There are signs of hope in the aviation marketplace, with the slow return of financing and the apparent bottoming-out of aircraft values. Buying opportunities abound-but so do risks; and no situation is more frustrating than finding yourself "infected" by someone else's bankruptcy. Even if the market has reached its nadir, there are many companies that are simply not going to survive much longer in the market as it has been redefined.
The United States District Court for the Southern District of New York has affirmed a bankruptcy court's ruling that defense costs advanced by an insurer to a debtor under an Interim Fee Advancement and Non-Waiver Agreement (the Interim Agreement) were not held in trust and, therefore, constituted property of the debtor's estate. Great Am. Ins. Co. v. Bally Total Fitness Holding Corp. (In re Bally Total Fitness of Greater N.Y.), No. 09-CV-4052, 2009 WL 1684022 (S.D.N.Y. June 15, 2009).
The Ninth Circuit Court of Appeals has held that an insured vs. insured exclusion bars coverage for a suit by a debtor-in-possession against former directors and officers of the company. Biltmore Assocs. v. Twin City Fire Ins. Co., No. 06-16417, 2009 WL 1976071 (9th Cir. July 10, 2009). The court rejected the argument that the debtor-in-possession was a different legal entity from the pre-bankruptcy company insured under the policy.
Debtor in Possession (“DIP”) financing is essentially new bridge financing that is provided to a corporation as it undergoes insolvency proceedings. The term exists because the corporation maintains possession of its assets during this process as opposed to having a bankruptcy trustee take possession. The concept derived from the United States of America where DIP financing is expressly provided for under c.11 of the Bankruptcy Code and allows a bankrupt corporation to incur new debt for the purposes of carrying on business operations.
In an unpublished summary order applying New York law, the United States Court of Appeals for the Second Circuit has affirmed a district court's judgment finding that many of the factual allegations asserted in a complaint against the directors and officers of the bankrupt policyholder were excluded by a prior litigation exclusion, even though some of the excluded losses accrued during time periods not at issue in the prior litigation. Pereira v. Gulf Ins. Co., 2009 WL 1262954 (2d Cir. May 6, 2009).
Radius Credit Union Limited v. Royal Bank of Canada [2009] S.J. No. 148, 2009 SKCA 36, on appeal from
2007 SKQB 472
1992: Farmer Wayne Hingtgen (“Debtor”) granted a general security agreement to Radius
Credit Union Limited (“CU”) granting a security interest on all his present and after
acquired assets.
Mercedes Benz Financial v. Ivica Kovacevic (Ont. SCJ)
February 26, 2009: Finding of contempt of Court: [2009] O.J. No. 783
March 3, 2009: Sentencing hearing and order of five days in jail [2009] O.J. No. 888
Mr. Kovacevic (the “Debtor”) entered into a conditional sale contract to finance a Mercedes vehicle with
Mercedes Benz Financial. After seven of forty-eight payments, he defaulted in payment. He refused to pay or return the vehicle.
GE financed two tractor trailers for Brampton Leasing & Rentals Ltd. (“Debtor”) under conditional sale contracts and perfected its security under the Personal Property Security Act (Ontario) (“PPSA”).
The Debtor leased the vehicles to lessees, who obtained vehicle insurance from ING. GE was not named as a loss payee by the Debtor or the lessees.
Re Friedman (2008), 49 C.B.R. (5th) 131 (Ont. S.C.J. in bankruptcy)
Mr. Friedman assigned his rights to royalties he would receive from SOCAN, the Canadian copyright collective that administers royalties for tis members, to his music publisher, to secure loan advances to him from the publisher.