One deliberately ironic facet of the 2004 film Howard Hughes bio-pic The Aviator (the one with Leonardo DiCaprio) is the fact that the airlines fighting for world dominance in the 1940s were Howard Hughes’ TWA and Juan Trippe’s Pan Am.  By the time of the movie, of course, both famous airlines were gone.  Pan Am’s final descent into bankruptcy court ended in 1991.  Following its own troubles (and two bankruptcies in the 1990s), TWA was acquired by American Airlines in 2001.  But does the death of an airline mean an end to litigation?  Of course not.

The health of the healthcare industry can be summarized as follows: as go federal reimbursement rates, so goes the financial viability of healthcare providers, whether hospitals, nursing homes or medical practices.

On 21 October 2013, the financially troubled company Hainan PO Shipping applied for bankruptcy and winding up before the People’s Court of Hainan Yangpu Economic & Development Zone (“Yangpu Court”). The Yangpu Court approved the application on 31 October 2013, and the Court has since nominated the administrators of Hainan PO Shipping.

“The Pen Is Mightier Than The Sword…And Verbal Communications During Company-Wide Employee Meetings.”

Two recent decisions may affect the assets of individuals available to satisfy creditors' claims in bankruptcy. In the first decision, the Bankruptcy Court for the Eastern District of New York determined that married, joint debtors received value in exchange for tuition payments and rejected the bankruptcy trustee's arguments that the tuition payments were fraudulent transfers.

A December 2012 ruling has effectively called into question the validity of engine leases in Denmark. Ruling in relation to the bankrupt regional airline Cimber Sterling, a judge in the District Court of Sønderborg ordered the trustees of the estate to return seven of the nine engines in question to the engine lessors. However, the two remaining engines, both GE CF34s valued at around USD 2 million each, were to be retained by the trustees as on the date of bankruptcy they had been affixed to the Bombardier CRJ200 aircraft for over three months.

Recent developments in the bankruptcy arena have placed a greater burden on claimants. Creditors are now required to make additional disclosures in their proof of claim forms, and courts are under no obligation to recognize late-filed claims. Proposed changes to the Bankruptcy Rules, including an amendment slashing the time to file a proof of claim, highlight the need for creditors to exercise extra vigilance.

GREATER DISCLOSURE

The Third Circuit recently held that claims purchased from trade creditors by a claims trader will be disallowed under section 502(d) of the Bankruptcy Code when the seller of the claim received, and did not repay, a preference. In doing so, the United States Court of Appeals for the Third Circuit expressed its disagreement with a relatively recent decision in the United States District Court for the Southern District of New York which reached the opposite conclusion.

A recent decision of the Federal Court of Australia has found that the arrest of vessels pursuant to existing security rights, such as maritime liens under Australian admiralty legislation, have priority over cross-border insolvency applications under the UNCITRAL Model Law on Cross-Border Insolvency.

Introduction

A make-whole premium is a lump-sum payment that becomes due under a financing agreement when repayment occurs before the stated maturity date, thereby depriving the lender of all future interest payments bargained for under the agreement. Make-whole provisions, ubiquitous in the bond market, are becoming more prevalent in commercial loan transactions, including in the distressed context. That trend is spurred by favorable court rulings for lenders enforcing make-whole premiums when the borrower files for bankruptcy protection.