On October 17, 2014, the Delaware Supreme Court held that under the Delaware Uniform Commercial Code, the subjective intent of a secured party is irrelevant in determining the effectiveness of a UCC-3 termination statement if the secured party authorized its filing.[1]  

Background

Recent case law reminds practitioners and lenders to pay careful attention when drafting prepayment premium provisions in debt instruments or risk having the premiums disallowed in a borrower’s bankruptcy case.

In In re MPM Silicones, LLC, Case No. 14-22503 (RDD) (Bankr. S.D.N.Y. Sept. 30, 2014) (Momentive), the court dismissed a senior lien creditors’ suit alleging that the junior lien creditors breached an intercreditor agreement (ICA) with respect to shared collateral by taking and supporting certain actions adverse to the senior lien creditors.

BACKGROUND

In Lewis Brothers Bakeries, Inc. and Chicago Baking Co. v. Interstate Brands Corp. (2014 WL 2535294 (8th Cir. June 6, 2014)), the United States Court of Appeals for the Eighth Circuit, sitting en banc, held that a perpetual, royalty-free, assignable, transferable, exclusive trademark license granted in connection with a substantially consummated asset purchase agreement was not an executory contract that could be assumed or rejected by the licensor-debtor in bankruptcy.

The recent case of APCOA Parking1 has set a precedent by allowing yet more non-English incorporated debtors to implement financial and corporate restructurings using English schemes of arrangement.

A federal district court has ruled that a distressed debt fund is not a “financial institution” for purposes of the assignment provisions of a loan agreement.

Background

A & F Enterprises, Inc. v. IHOP Franchising LLC (In re A & F Enterprises, Inc.), 2014 WL 494857 (7th Cir. 2014)

On February 4, 2014, the United States Bankruptcy Court for the District of New Jersey in In re Surma, 2014 WL 413572 (Bankr. D.N.J. Feb. 4, 2014), held that rents were not property of the debtor’s bankruptcy estate because they were subject to an absolute and unconditional assignment of rents in favor of the secured lender. As a result, the court concluded that the debtor may not, through his Chapter 11 plan of reorganization, use or allocate rents.

Background

In In reLehman Brothers Inc., two creditors recently made an unsuccessful attempt to infuse Section 510(b) of the Bankruptcy Code with ambiguity and avoid the subordination of their claims.  In re Lehman Brothers, Inc., 2014 WL 288571 (Bankr. S.D.N.Y.

Section 546(e) of the Bankruptcy Code limits the ability of a trustee or debtor-in-possession to avoid as a constructive fraudulent transfer or preferential transfer a transaction in which the challenged settlement payment was made through a stockbroker or a financial institution.1 Because of the broad protection granted by section 546(e) – the so-called “safe harbor” provision – parties structuring a leveraged buyout (“LBO”) or similar transaction often ensure that settlement funds flow through one of the listed institutions to inoculate the beneficiaries from a later challenge as a constr