Sometime this summer, the Supreme Court is expected to issue its ruling in U.S. v. Quality Stores. In this case, the Supreme Court reviewed the Sixth Circuit’s holding that supplemental unemployment compensation benefits (“SUB payments”) relating to severance payments are not subject to FICA taxes. U.S. v. Quality Stores, 693 F.3d 605 (6th Cir. 2012). The Sixth Circuit decision resurrects a long-disputed issue regarding the applicability of FICA to severance pay.
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.
A Canadian on-line dating site, PlentyofFish, wanted to purchase the bankrupt site True.com but the Texas Attorney General filed a petition to block the marriage on the ground that the transfer of the private personal information of millions of people who had used True.com would potentially violate the Texas Deceptive Trade Practices Act. Which made us think: Is a corporation’s violation of its customers’ personal privacy covered by insurance?
A liability insurance company has the right to take over the defense of a policyholder and to control all settlement discussions. What happens if the carrier fails to pursue settlement negotiations with sufficient zeal, knowing full well that it was leaving the insured exposed to liability above policy limits? You may be at risk in California if your insurer does this to you.
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.