The Second Circuit recently issued its opinion in the DBSD N.A., Inc. bankruptcy case addressing several bankruptcy issues that have received wide-spread reporting, including the validity of the "gifting” doctrine and the standing of an "out of the money" creditor to object to confirmation of a chapter 11 plan. A lesser publicized issue addressed in the decision, but one that should signal a warning to claim purchaser’s of bankrupt companies, was the designation of a vote of DISH Network Inc. on DBSD's plan under section 1126(e) of the Bankruptcy Code.

On May 29, 2012, the United States Supreme Court issued its decision in RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. ___ (2012), which affirmed that secured creditors have the right to use their claims to credit bid in auctions of their collateral conducted under bankruptcy reorganization plans. The decision is a victory for secured lenders because these credit bid rights ensure that, in the context of a collateral sale, secured lenders will be able to use their claims to purchase their collateral if they are not being repaid in full.

Litigation arising from the Tousa, Inc. fraudulent transfer claims has been working its way through the legal system since 2009, and the recent decision issued by the 11th Circuit Court of Appeals (the “11th Circuit”), has significant ramifications for any party holding debt, whether that debt is secured, unsecured, original issue or purchased on the secondary market. Regardless of the type of debt, or its source, Tousa illustrates that lenders must heighten their due diligence efforts to protect themselves from the risk of a lawsuit alleging fraudulent transfer liability.

Bankruptcy Rule changes, effective December 1, 2011, require mortgage holders and servicers to include additional documentation supporting proofs of claim filed in individual debtor cases. Mortgage holders and servicers must follow these rules or face sanctions and potential loss of the right to present the omitted documentation as evidence in subsequent proceedings.

On January 19, 2012, the Seventh Circuit in In re River East Plaza, LLC, (No. 11-3263), held in favor of a secured lender further strengthening the rights of secured creditors in bankruptcy cases.

The Court of Appeal of the Eastern Caribbean Supreme Court sitting in the British Virgin Islands today began hearing arguments in the greatly anticipated appeals involving claims brought by the liquidators of Fairfield Sentry Limited ("Fairfield").

Redemption of shares and consideration
Discounted valuation
Restoration
Finality of foreign judgments

Redemption of shares and consideration

As we reported in a client mailshot earlier this week, the Eastern Caribbean Supreme Court has made important amendment to its rules. The amendments are immediately in force and deal with a number of areas including appeal procedure, costs capping and costs orders.

In an application to wind up a BVI company the BVI Court re-stated the rules on when a foreign judgment creates an issue estoppel. Following The Sennar [1985] 1 WLR 490 the Court found that there would be an estoppel where a foreign judgment is (1) of a court of competent jurisdiction; (2) is final and conclusive; and (3) on the merits.

In a decision of interest in a number of jurisdictions where these types of claims have been made, the BVI Commercial Court handed down judgment today in the claim brought by the liquidators of Fairfield Sentry Limited, a BVI fund which invested in Bernard Madoff’s investment vehicle.