Greenberg Traurig, LLP | gtlaw.com 1 Sixth Annual American College of Bankruptcy Seventh Circuit Education Committee Seminar Session: Exploring the Outer Limits of the Avoiding Powers September 11, 2015 IIT Chicago-Kent College of Law 565 West Adams Street Chicago, IL Moderator: Nancy A.
The Trustee for the Liquidation of MF Global Inc. – the defunct futures commission merchant that filed for bankruptcy in October 2011 – received approval from the US Bankruptcy Court overseeing its dissolution to make a final, cumulative 95 percent distribution on all allowed general unsecured creditor claims.
Unsecured general creditors of defunct MF Global, Inc. (other than those of its parent company MF Global Holdings Ltd.) will receive a final payment from the firm, giving them a total recovery of 95 percent of their approved claims, under a proposal made last week by the overseers of the liquidation of the firm and its parent company.
This week’s unanimous Supreme Court decision barring the strip off of wholly unsecured junior liens in chapter 7 cases is one of the stranger recent opinions of the Court. See Bank of America, N.A. v. Caulkett, No. 13-1421, ___ U.S. ___ (June 1, 2015). While the result is not particularly surprising, what is unusual is that the Court goes out of its way to question its two decades old decision inDewsnup and may even be hinting that it is ready to overrule that decision. See Dewsnup v. Timm,502 U.S. 410 (1992).
A collective sigh of relief was the main effect of this week’s much-awaited Supreme Court decision on bankruptcy jurisdiction in Wellness International Network, Ltd. v. Sharif, No. 13-935, ___ U.S.___ (May 26, 2015, Sotomayor, J.). While a number of minor issues remain, the majority’s ruling that bankruptcy judges can issue judgments and final orders with the parties’ consent means that the current bankruptcy system can continue to function normally.
The United States bankruptcy judge overseeing the liquidation of MF Global Inc., approved the trustee’s proposal to pay all unsecured general creditors $461 million. Once paid, this distribution would result in total distributions to unsecured general creditors of 72 percent of their approved claims.
The New York State Attorney General settled a lawsuit against Ernst & Young related to its involvement in the financial statement preparation of Lehman Brothers Holding, Inc. The NY AG had alleged that the auditing firm had countenanced Lehman’s inclusion of certain repurchase transactions as sales and not as financings, which permitted the firm to remove “tens of billions of dollars” of securities from its balance sheet. According to the NY AG, the repo transactions—known as “Repo 105”—“served no legitimate purpose.
The trustee for the liquidation of MF Global Inc. is seeking permission from the bankruptcy judge overseeing the firm’s dissolution to make a distribution of US $461 million to unsecured general creditors. If approved, this distribution would result in total distributions to unsecured general creditors of 72 percent of their approved claims. To date, the trustee has distributed 100 percent of approved claims of MF Global’s customers (totaling US $6.7 billion), and 100 percent of approved secured, priority and administrative claims.
In a little-noticed November opinion, the Seventh Circuit greatly expanded the ability of a bankruptcy trustee to avoid a security interest for documentation errors under section 544(a)(1) of the Bankruptcy Code. See State Bank of Toulon v. Covey (In re Duckworth), 776 F.3d 453 (7th Cir. 2014).
On January 14, 2015, Target Corporation ("Target US") announced the exit of substantially all of its Canadian operations less than two years after opening its first Canadian stores in a strategic push to operate at least one store in every province of Canada. The following day, on January 15, the Ontario Superior Court of Justice (Commercial List) in Toronto (the "Court") granted Target Canada Co.