"The Parent Bank entered into this insurance contract with its eyes wide open and its wallet on its mind."

The Supreme Court of the United States inMidland v. Johnson reversed the Eleventh Circuit Court of Appeals and held that a debt collector that files a proof of claim for debt that is barred by the applicable statute of limitations does not violate the Fair Debt Collection Practices Act (FDCPA) if the face of the proof of claim makes clear that the statute of limitations has run. The Supreme Court refused to accept the debtor's argument that Midland's proof of claim was "false, deceptive, or misleading" under the FDCPA.

In two recent decisions, both the United States Courts of Appeals for the Fourth Circuit (Fourth Circuit) and the Fifth Circuit (Fifth Circuit) concluded that certain orders entered in bankruptcy cases could not be grounds for invocation of res judicata with regard to proofs of claim that are deemed allowed. Both addressed the plain language of Section 502(a) of the United States Bankruptcy Code (the Code) in conjunction with relevant Bankruptcy Rules and Official Forms, and congressional intent.

Over the last several decades, the enforcement of intercreditor agreements ("ICAs") that purport to affect voting rights and the rights to receive payments of cash or other property in respect of secured claims have played an increasingly prominent role in bankruptcy cases. Although the Bankruptcy Code provides that "subordination agreement[s]" are enforceable in bankruptcy to the same extent such agreements are enforceable under applicable nonbankruptcy law, the handling of creditor disputes regarding such agreements has been inconsistent.i

On March 9, 2017, a bankruptcy court in New York became the latest to weigh in on the developing circuit court split regarding whether modification of mortgages should be permitted under 11 U.S.C.

The United States District Court for the District of Massachusetts (the District Court) recently issued an opinion in the Paul Sagendorph bankruptcy case reversing the Bankruptcy Court's holding that a debtor can force a secured creditor to take title to its collateral in complete satisfaction of the creditor's secured claim.1 In reversing the decision of the Bankruptcy Court, the District Court held that the plain language of Sections 1322(b)(9) and 1325(a)(5)(C)2 does not empower a debtor to force a secured creditor to accept title to its collateral over that creditor's objection.3

Although political and economic uncertainties tempered corporate activity somewhat in 2016, the trends and fundamentals that have the potential to drive transactions remain in place in 2017.

Capital Markets

Crude oil and natural gas prices reached multiyear lows of approximately $26 per barrel for crude oil (as of January 2016) and $1.50 per million British thermal units (mmbtu) for natural gas (as of March 2016). This represented a 75 percent decline in the price of oil from its peak of approximately $105 per barrel in mid-2014 and an 80 percent decline in the price of natural gas from its early 2014 peak of over $8 per mmbtu. At the time, many industry observers predicted that depressed commodity prices would result in numerous bankruptcy filings and an uptick in M&A activity.

On January 17, 2017, the U.S. Court of Appeals for the Second Circuit issued an opinion in Marblegate Asset Management v. Education Management Corp., 15-2124-cv(L), 15-2141cv(CON) (2nd Cir. Jan. 17, 2017), overturning a broad interpretation of the Trust Indenture Act (TIA) by the U.S.

Section 316(b) of the Trust Indenture Act (the "TIA") states the right of a bondholder to receive payments pursuant to an indenture security cannot be "impaired or affected without the consent of such holder." Historically, issuers and bondholders have not engaged in extensive litigation based on the argument that Section 316(b) provides a broad restriction protecting bondholders' substantive right to actually receive such payments.