On February 1st, the Tenth Circuit held that Deutsche Bank failed to establish it was a "party of interest" entitled to relief from a bankruptcy petition's automatic stay. After Deutsche Bank's foreclosure of the Millers' home was stayed by the latter's bankruptcy petition, the bank obtained relief from the stay. On appeal, the Tenth Circuit reversed and remanded. The bank failed to provide the original note to the bankruptcy court and did not provide the original or a copy to the bankruptcy appellate panel.

The United States Bankruptcy Court for the District of Delaware (the Court) recently granted a motion to dismiss a mezzanine borrower’s chapter 11 bankruptcy petition at the outset of the debtor’s case.¹ In In re JER/Jameson Mezz Borrower II, LLC, The Court found that the debtor’s petition had been filed in bad faith because, among other things, a junior mezzanine lender had directed the debtor to file the petition with the intent of hindering a senior mezzanine lender’s foreclosure efforts and without any valid reorganization purpose.

The United States Bankruptcy Court for the Southern District of New York issued a memorandum decision in the Lehman Brothers Inc. (LBI) liquidation proceeding confirming the LBI trustee’s determination that certain claims relating to TBA contracts do not qualify as customer claims against LBI’s estate.

The McCaskill-Bond Amendment to the Federal Aviation Act provides that a merger of air carriers requires the new entity to merge the seniority lists of the two carriers’ employees. Republic Airways acquired Midwest Airlines, and thereafter the Teamsters Union, which represented the flight attendants at Republic’s older carriers, refused to integrate the seniority lists for flight attendants and placed Midwest’s flight attendants at the bottom of the seniority roster. A group of Midwest flight attendants challenged the action, asserting that it violated the amendment.

On November 25, a notice of proposed rulemaking was published jointly by the Federal Deposit Insurance Corporation (the FDIC) and the Departmental Offices of the Department of the Treasury (the Treasury, and collectively, the Agencies) to implement applicable provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). In accordance with the requirements of the Dodd-Frank Act, the proposed rules govern the calculation of the maximum obligation limitation (MOL), as specified in section 210(n)(6) of the Dodd-Frank Act.

On November 11th, Reuters reported on the November 10 filing of bankruptcy court protection by Jefferson County, Alabama, the largest municipal bankruptcy in U.S. history. The county declared bankruptcy after failing to reach an agreement with its creditors on its $3.14 billion debt. Hearings are set for November 21 and December 15 to decide who maintains control of the sewer system and to determine eligibility for Chapter 9. Bankruptcy.

On November 4th, the Federal Bankruptcy Court granted the SIPC Trustee's motion to establish procedures for the issuance of subpoenas for document production and depositions in connection with the SIPC Trustee's independent investigation into the business and affairs of MF Global. Access to documents produced by witnesses and attendance at examinations will be limited to the SIPC Trustee and his professionals. The SIPC, SEC and CFTC will have access to the discovery upon the execution of confidentiality agreements.

As MF Global, Inc. declared bankruptcy on October 31st, the CFTC and SEC released a statement advising that MF Global had informed them of possible deficiencies in customer futures segregated accounts. CFTC-SEC Press Release. On November 1st, the Wall Street Journal reported that the FBI is investigating whether MF Global diverted customer funds.

On October 18th, Bloomberg reported on H.R. 2433, the Chapter 11 Bankruptcy Venue Reform Act of 2011. The bill would restrict corporate bankruptcy filings to the state in which a firm has its principal place of business or holds most of its assets. Forum Shopping.

The United States Bankruptcy Court for the Southern District of New York (the Court), has held that section 553(a) of the Bankruptcy Code prohibits a swap counterparty from setting off amounts owed to the debtor against amounts owed by the debtor to affiliates of the counterparty, notwithstanding the safe harbor provision in section 561 of the Bankruptcy Code and language in the ISDA Master Agreement permitting the swap counterparty to effect “triangular” setoffs. In re Lehman Brothers Inc., Case No. 08-01420 (JMP)(SIPA) (Bankr. S.D.N.Y. October 4, 2011).