In a recent opinion, the Supreme Court unanimously affirmed a secured lender’s right to credit-bid at a bankruptcy sale of assets encumbered by such lender’s liens. In addition to solidifying the rights and protections afforded to a secured creditor in bankruptcy, the Supreme Court lessened some of the uncertainty associated with the acquisition strategy by which a potential buyer purchases claims secured by the targeted assets of a troubled company and seeks to exercise such secured creditor’s rights as to such assets.
Meredith Whitney, one of the first financial analysts to foresee the collapse of the housing market, famously predicted in December 2010 that a wave of municipal bond defaults was on the way. The wave, however, has yet to materialize, and the bankruptcy filing of Stockton, California will likely not change th
The Supreme Court has cleared the way for Irving Picard, the Trustee overseeing the Madoff liquidation proceeding, to distribute billions of dollars to victims of Madoff’s Ponzi scheme. On Monday, the Court declined to hear appeals in two cases from the Second Circuit challenging Picard’s formula for repaying victims.
The chapter 11 case of mortgage lender and servicer Residential Capital, LLC (“ResCap”) is fascinating on a number of levels. Its parent company, Ally Financial, Inc.
Recently, the Supreme Court of the United States held that a debtor cannot confirm a Chapter 11 “cramdown” plan that provides for the sale of collateral free and clear of a secured creditor’s lien when it denies the secured creditor’s right to credit bid at the auction. This should be welcome news to members of the secured lending community because guaranteeing the right of secured creditors to credit bid will reduce the risk of making such loans.
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IN RE: USA BABY, INC. (March 28, 2012)
Scott Wallis owned 5% of USA Baby, Inc., a children's furniture franchisor. After its creditors forced it into reorganization, the bankruptcy trustee moved to convert the case to a liquidation. The bankruptcy judge agreed. Wallis moved twice for reconsideration. He alleged first that the trustee and franchisees committed fraud. He later argued that reorganization was possible if the franchisees paid fees that were due. The court denied his requests. Judge Lefkow (N.D. Ill.) affirmed. Wallis appeals.
The U.S. Court of Appeals for the Fifth Circuit recently held that a paragraph in an asset purchase agreement qualified as an amendment to an employee benefit plan, highlighting a split between circuits of the U.S. Courts of Appeal.
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The Supreme Court heard arguments yesterday in RadLAX Gateway Hotel over whether the Bankruptcy Code permits a debtor in a chapter 11 case to sell encumbered assets without providing its secured lenders an opportunity to credit bid their debt.
Opposing lawyers for Jefferson County, the debtor in the largest Chapter 9 municipal bankruptcy case ever filed, and the holders of its sewer warrants squared off last week in the ongoing fight over control of the County’s sewer system and the right to its revenues. (Expert witness