On February 4th, the United States Court of Appeals for the Seventh Circuit affirmed the dismissal of claims brought by plaintiffs, who controlled a mutual bank before it collapsed, against the FDIC as both regulator and as receiver. The Administrative Procedures Act (the "APA") claim against the FDIC as regulator, which seeks money damages and an order directing the FDIC to treat $23.6 million in subordinated debt as bank deposits, is a claim for substitute relief barred by the APA.

Is a bankrupt pledgor legally bound to fulfill its promise to pledge a gift; or will a nonprofit have a successful claim against a pledgor if there is a subsequent failure to make payment because of a bankruptcy filing? A district court in Arizona recently held that St. Joseph's, a nonprofit hospital, did not have an enforceable claim in Bashas' Inc.'s bankruptcy for Bashas' $50,000 charitable pledge because of Bashas' bankruptcy. In re Bashas' Inc., 2012 WL 5289501 (D. Ariz. Oct. 25, 2012).

• Approximately 5,000 Bakery Confectionery Tobacco and Grain Millers Union (BCTGM) members across the country struck Hostess Brands, Inc., to protest the company’s imposition of its last, best, and final contract. That contract, which provided for an 8% wage cut and a 17% reduction in health and welfare benefits, was rejected by BCTGM members in September, but ratified by some 7,500 Hostess employees represented by the Teamsters. In October, Hostess received federal bankruptcy court approval to impose the contract.

One of the most powerful tools a chapter 11 debtor has is the ability to assume or reject executory contracts under section 365 of the Bankruptcy Code.  In bankruptcy parlance, when a debtor “rejects” an executory contract, it is considered as though the debtor breached the agreement as of the date it filed for bankruptcy and sheds the debtor’s obligation to perform under the rejected contract.  The non-debtor party receives a claim for damages arising from the debtor’s breach; however, in many cases, it will be worth only pennies on the dollar.  The converse of rejection is

A few weeks ago, the Sixth Circuit affirmed the Western District Court of Michigan’s holding in U.S. v. Quality Stores Inc., 424 B.R. 237 (W.D. Mich. 2010), that severance payments made to employees pursuant to an involuntary reduction in force were not “wages” for Federal Insurance Contribution Act (“FICA”) tax purposes. U.S. v. Quality Stores Inc., No. 10-1563 (6th Cir. 2012). The Sixth Circuit’s decision creates a circuit court split with the Federal Circuit and its 2008 decision in CSX Corporation v. United States, 518 F.3d 1328 (Fed. Cir. 2008).

On September 14, the Sixth Circuit affirmed the trial court's finding that a failed bank's parent did not make a capital maintenance commitment to the bank. After the parent filed for bankruptcy, the FDIC was appointed receiver for the bank. The FDIC then sought payment from the parent under the statute requiring a party seeking reorganization to fulfill commitments to maintain the capital of an insured depository institution.

On August 20th, the U.S. Court of Appeals for the Tenth Circuit reversed a trial court's ruling finding that judgments against Ponzi scheme "net gainers" were non-dischargeable in bankruptcy. The debtors were early investors in what turned out to be a Ponzi scheme and received more money than they invested. When the Ponzi scheme was uncovered, the state State of Oklahoma sued the debtors for unjust enrichment but not for any securities violations. After the State obtained a judgment on the unjust enrichment claim, the debtors declared bankruptcy.

In a recent decision authored by Chief Judge Easterbrook, the United States Court of Appeals for the Seventh Circuit (Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC, Docket No. 11-3920 (7th Cir. July 9, 2012)) held that the licensee of a trademark does not necessarily lose the right to use the licensed marks when a debtor-licensor rejects the underlying license agreement in its bankruptcy case.  In so holding, the Court rejected a contrary decision reached by the United States Court of Appeals for the Fourth Circuit in Lubrizol Enterprises, Inc. v.

On July 16th, the National Futures Association ("NFA") announced it has requested that the Special Committee for the Protection of Customer Funds, consisting of the public representatives on NFA's Board of Directors, retain the services of a national law firm to conduct a careful internal review of NFA's audit practices and procedures, and the execution of those procedures in the specific instance of Peregrine Financial Group, to assure that the right procedures are in place and that they are being properly followed.

In 2009, the owners and management of The Philadelphia Inquirer, one of the nation's largest daily circulation newspapers, proposed a bankruptcy plan that attacked secured creditors' rights to bid their loans. When the District Court and the Third Circuit both approved the tactic, the plan gained national attention.