In Van Sickle, the plaintiffs each owned a royalty interest in a well that was originally leased by Comanche Oil Company, which later assigned its interests to Athens/Alpha Gas Corporation. Alpha later filed for reorganization under Chapter 11 of the bankruptcy code, and the plan was approved without inclusion of the Van Sickles' claims. The Van Sickles sought to hold both companies liable under the doctrine of successor liability for pre-bankruptcy-court-confirmation royalties under the N.D.C.C. § 47-16-39.1, which provides in part:
In determining their preference liability exposure, creditors typically consider whether they have provided any subsequent “new value” to the debtor after they have received an alleged preferential payment. Debtors and trustees frequently take the position that creditors cannot use as a defense any new value that has been repaid to the creditor post-petition through critical vendor payments or pursuant to Section 503(b)(9) of the Bankruptcy Code. Bankruptcy courts have ruled differently on this issue.
Due to inconsistent decisions in the Second Circuit and Third Circuit, there has been some uncertainty as to whether a purchaser of a bankruptcy claim is subject to defenses that a debtor would have against the original creditor. Recently, this issue was settled with respect to cases filed in the Third Circuit.
On October 7, 2013, the United States Supreme Court refused to review a Seventh Circuit decision1 in the Castleton Plaza, LP case, which held that a new value plan proposed by the debtor in which an equity-holder’s spouse would provide a cash infusion to the debtor in exchange for 100 percent of the reorganiz
The U.S. Court of Appeals for the Third Circuit recently confirmed that a channeling injunction pursuant to 11 U.S.C.
On August 27, 2013, in a case of first impression, the Third Circuit rejected an attack on a foreign liquidator’s petition for recognition of an Australian insolvency proceeding under Chapter 15 of the US Bankruptcy Code premised on the argument that the foreign proceeding violated US public policy.
The United States Court of Appeals for the Tenth Circuit recently shut down litigation filed by plaintiffs who had represented to a Bankruptcy Court that their claims were worth far less than they were attempting to recover in a lawsuit filed in federal district court. Queen v. TA Operating, LLC, --- F.3d ----, 2013 WL 4419322, (10th Cir. Aug. 20, 2013).
It should be common knowledge that a secured creditor, having received proper notice in a Chapter 11 bankruptcy case, faces the risk that its lien will be extinguished if it fails to object to a reorganization plan that does not specifically preserve the lien. Apparently, however, not all secured lenders realize this risk, and some fall prey to a trap for the unwary in §1141(c) of the Bankruptcy Code by failing to protect their liens and place their collateral at risk.
The United States Court of Appeals for the Second Circuit (the "Second Circuit") recently affirmed a broad reading of the safe harbor of United States Bankruptcy Code (the "Bankruptcy Code") section 546(e), which protects from avoidance both "margin payments" and "settlement payments" as well as transfers made in connection with a "securities contract." In Quebecor, the Second Circuit affirmed decisions of the bankruptcy and district courts and held that the purchase by Quebecor World (USA) Inc.
On a matter of first impression, the Fourth Circuit issued an opinion in the Derivium Capital, LLC bankruptcy case on May 24, 2013,1 affirming the District Court’s ruling that Grayson Consulting Inc. ("Grayson"), the chapter 7 Trustee’s assignee, could not avoid as fraudulent conveyances Wachovia’s2 commissions, fees, and margin interest payments because those payments were protected from recovery by the safe harbor of United States Bankruptcy Code (the "Bankruptcy Code") section 546(e).