Introduction

The usual Friday release of a large number of letter rulings by the IRS included several rulings of interest on reorganizations and consolidated return issues.

While bankruptcy law and tort law may not seem related, it is important to know if your client has ever gone through a bankruptcy and, if so, the terms of its plan of reorganization. A recent Eighth Circuit decision confirmed the importance of knowing the ins and outs of a client’s bankruptcy and the terms of the applicable plan.

On December 22, 2011, the United States Bankruptcy Court for the District of Delaware inIn re JER/Jameson Mezz Borrower II LLC ¹ dismissed with prejudice a mezzanine borrower’s bankruptcy case for bad faith under Section 1112(b) of the Bankruptcy Code. In doing so, the court clarified that the standard in the Third Circuit to evaluate the good faith of a debtor seeking shelter under the umbrella of Chapter 11 of the Bankruptcy Code is an objective one and does not consider the subjective good faith of a debtor as do courts within the Secon d Circuit.

Generic Legal Advice Memorandum AM 2011-003 (August 18, 2011)

Overview

A recent Court of Appeal case confirms that the Foreign Judgments (Reciprocal Enforcement) Act 1933 does apply to judgments in insolvency matters and that the Insolvency Act 1986 can be used to enforce a foreign judgment.

In New Cap Reinsurance Corporation Ltd & Anr v AE Grant & Ors [2011] EWCA Civ 971, the Court of Appeal upheld the first instance decision of the Companies Court that a judgment obtained in Australia could be enforced in England under section 426 of the Insolvency Act (the IA) and at common law.

NEW CAP RE: THE FACTS

As we previously report here, Ambac Financial Group, Inc. (“AFG”), the holding company for the bond insurer, Ambac Assurance Corp. (“AAC”), filed for bankruptcy in November 2010 after it was unable to raise additional capital or come to terms with its debt holders.

U.S. Bankruptcy Judge Martin Glenn of the Southern District of New York has approved a stipulation between bankrupt bookseller Borders Group Inc. ("Borders") and email marketer Next Jump Inc. ("Next Jump") that will require Next Jump, a former marketing partner of Borders, to stop emailing Borders' customers and remove Borders' trademarks from its website and email blasts.

In New Cap Reinsurance Corporation Ltd & Anr v AE Grant & Ors, the Court of Appeal has upheld a first instance decision that section 426 of the Insolvency Act (IA) can be used to enforce a foreign monetary judgment in insolvency proceedings. However, the Court acknowledged that where there exists a statutory framework for the enforcement of foreign judgments, in this case enforcement pursuant to the Foreign Judgments (Reciprocal Enforcement) Act 1933 (the 1933 Act), then enforcement under s.426 of the IA must follow the requirements of the 1933 Act.

The case concerned credit default swaps entered into between Lehman Brothers Special Financing Inc., and various parties, and the rights of the parties in respect of collateral held by a trustee.