© 2015 Hunton & Williams LLP 1 May 2015 Oak Rock Financial District Court Addresses the Applicable Legal Standard for True Participation Agreements The United States District Court for the Eastern District of New York recently applied two tests, the True Participation Test and the Disguised Loan Test, to determine whether agreements were true participation agreements or disguised loans.1 In addition, the District Court noted that the most important question in such a determination is the risk of loss allocation in the transaction, and that if an alleged participant is not subject to the
In Quadrant Structured Products Company, Ltd. v. Vertin, the Delaware Court of Chancery made two key rulings concerning the rights of creditors to bring derivative lawsuits against corporate directors.1 First, the court held that there is no continuous insolvency requirement during the pendency of the lawsuit.
In two recent cases, the United States District Court for the Southern District of New York has indicated that Section 316(b) of Trust Indenture Act of 19391 (the “TIA”) requires unanimous consent for out-of- court restructurings that impair bondholders’ practical ability to receive payments, even if the bondholders’ technical, legal ability to receive payments remains intact.
The United States Court of Appeals for the Fifth Circuit recently entered an order confirming that when a fraudulent transfer defendant is able to establish a defense pursuant to 11 U.S.C.
On November 5, 2014, the United States Bankruptcy Court for the Western District of Virginia issued a noteworthy opinion that runs counter to what many Virginia law practitioners assume to be the common law in Virginia – i.e., that a manager of a Virginia limited liability company owes a fiduciary duty of loyalty to the limited liability company.
On December 8, 2014, the American Bankruptcy Institute (ABI) Commission to Study the Reform of Chapter 11 published a 400-page report containing far-reaching recommendations. The report is the result of a three-year study process undertaken by a number of leading insolvency and restructuring practitioners charged by ABI with evaluating the U.S.
In Cortlandt St. Recovery Corp. v Hellas Telecom., S.A.R.L., 2014 NY Slip Op 24268 (Sup. Ct., N.Y. County 2014), the Supreme Court of the State of New York ruled on two important issues related to the right to sue for recovery with respect to notes issued under indentures. First, the court held that assignments of a right of collection, but not title to the claims or the note itself, are insufficient as a matter of New York law to confer standing upon an assignee to sue for recovery on a defaulted note.
The United States District Court for the District of Delaware recently entered a Memorandum Opinion (the “District Court Opinion”) concerning the constitutional sufficiency of the publication of the bar date notice in the New Century bankruptcy as it applies to unknown creditors.1 The District Court vacated the Bankruptcy Court’s August 30, 2013,order (the “Constructive Notice Order”), which had approved the constitutional sufficiency of notice to unknown creditors by publication in The Wall Street Journal and the Orange County Register.
On June 20, 2014, the Texas Supreme Court issued its opinion in Ritchie v. Rupe, 2014 Tex. LEXIS 500 (Tex. 2014). In Ritchie, a minority shareholder in a closely held corporation attempted to force the majority shareholders to buy-out the minority shareholder’s interest in the corporation by bringing a claim of shareholder oppression under § 11.404 of the Texas Business Organizations Code (TBOC), the Texas receivership statute.
The United States Court of Appeals for the Eleventh Circuit (the “Eleventh Circuit”) has become the first circuit court to extend sections 1692e and 1692f of the Fair Debt Collection Practices Act (“FDCPA”) to proofs of claim filed in a bankruptcy case, ruling that a debt collector is prohibited from filing a proof of claim on debt that is barred by the applicable state statute of limitation. In Crawford v. LVNV Funding, LLC, et al.