On February 14, 2013, the United States Court of Appeals for the Seventh Circuit in In re Castleton Plaza, LP,¹ became the first court of appeals to consider whether a competitive auction is required when a debtor’s plan of reorganization provides an “insider” that does not hold an equity interest in the debtor with an exclusive option to purchase equity in exchange for new value since the Supreme Court’s landmark decision in 203 N. LaSalle² more than a decade ago.

On January 17, 2013, the United States Bankruptcy Appellate Panel for the First Circuit (the “First Circuit BAP”) rendered its opinion in Massachusetts Department of Unemployment Assistance v. OPK Biotech, LLC (In re PBBPC, Inc.), BAP No. MB 12-042 (B.A.P. 1st Cir. Jan.

The Sixth Circuit Court of Appeals recently affirmed the decisions of the courts below and held in an unpublished opinion that a secured lender’s credit bid at a Michigan foreclosure sale extinguished all of the Chapter 13 debtor’s indebtedness to the lender, thereby precluding the lender from executing on a prepetition foreclosure judgment obtained against the debtor in Wisconsin. State Bank of Florence v. Miller (In re Miller), 2013 WL 425342 (6th Cir. Feb. 5, 2013).

In a previous Alert that we published in July 2012 entitled “Michigan Court Authorizes Receiver Sale of Real Property Free and Clear of Redemption Rights,” we reported on a decision of a Michigan trial court in Ottawa County, Michigan permitting a state-court receiver to sell real property free and clear of a mortgagor’s redemption rights.

In a fairly controversial decision from January 2012, the United States Bankruptcy Court for the Central District of Illinois held that a financing statement must contain the “legal” name of an individual as it appears on the individual’s birth certificate. Miller v. State Bank of Arthur (In re Miller), Adv. P. No. 11-9055 (Bankr. C.D. Ill. Jan. 6, 2012). On appeal, the United States District Court for the Central District of Illinois reversed and held that the Uniform Commercial Code requires only that a “correct” name appear on the financing statement.

The Second

Indiana Code Section 32-28-3-9, often referred to as the Personal Liability Notice (PLN) Statute, provides a means for subcontractors, equipment lessors, and laborers to assert a claim against a project owner for amounts owed for labor and material on a construction project. Essentially, the PLN Statute provides a means to assert a lien against funds the owner would otherwise pay to a general contractor, as contrasted to asserting a mechanic’s lien claim against real estate.

On August 2, 2012, the United States Court of Appeals for the Fifth Circuit issued its decision in Lightfoot v. MXEnergy Elec., Inc. (In re MBS Mgmt. Servs., Inc.), Case No. 11-30553 (5th Cir. 2012), holding that a real estate management company’s electricity supply contract qualified as a “forward contract”, payments on account of which are protected from avoidance as preferential transfers under the Bankruptcy Code’s “safe harbor” provisions.

The Indiana Court of Appeals recently held in a published opinion that the appointment of a receiver for the benefit of a mortgagee who agreed to subordinate its mortgages was mandatory under Indiana law. PNC Bank, Nat’l Assoc. v. LA Dev., Inc., __ N.W.2d __, 2012 WL 3156539 (Ind. Ct. App. Aug. 6, 2012).

Like the common law of most other states, Michigan law generally grants to a court-appointed receiver a first priority claim in the receivership proceeding for payment of the receiver’s fees and expenses incurred in that proceeding. See, e.g., In re Dissolution of Henry Smith Floral Co., 260 Mich. 299, 244 N.W. 480 (1932); Cohen v. Cohen, 125 Mich. App. 206, 335 N.W.2d 661 (1983).