Intercreditor agreements between multiple lenders are part and parcel of lending to a company with several tranches of debt. Under section 510 of the United States Bankruptcy Code (the “Code”), “[a] subordination agreement is enforceable in a case under this title to the same extent that such agreement is enforceable under applicable nonbankruptcy law.” 11 U.S.C. § 510(a) (West 2017).

The sole shareholder of several closely held corporate entities engages in a fraudulent transfer by extinguishing one entity’s right to payment from a third party in exchange for the release of liabilities owed by other entities to that same third party. In Motorworld, Inc. v. William Benkendorf, et al., __ N.J. __ (Mar. 30, 2017), the New Jersey Supreme Court voided such a transfer against a Chapter 7 debtor corporation whose sole asset was a $600,000 loan receivable purportedly cancelled by the release.

The Supreme Court issued its much-anticipated ruling in Czyzewski v. Jevic Holding Corp., 580 U.S. ___ (2017)1 on March 21, reversing the Third Circuit Court of Appeals’ affirmance of an order approving the distribution of the proceeds of settlement of bankruptcy estate causes of action to general unsecured creditors via structured dismissal, with no distribution to holders of priority wage claims.

The Court framed the question presented, and its ruling, very narrowly—twice. First:

In a very recent decision, the U.S. District Court for the Southern District of New York determined that a negative inference to an exception to a negative covenant prevented a company from undertaking a proposed restructuring transaction. We find the case unique not because of the result necessarily, but rather because the court used the negative inference to override another express provision in the Credit Agreement.

Although there has been much discussion of the Second Circuit’s recent decision in Marblegate, this article addresses a question other commentators have yet to tackle: namely, how the Second Circuit’s decision impacts the Trust Indenture Act’s protection of guarantee obligations included in an indenture. Below we provide our view on how Marblegate affects indenture guarantees. More specifically, we discuss how the decision is consistent with provisions of the TIA that expressly protect a noteholder’s payment rights under a guarantee.

Synopsis

On September 18, 2015, Margaret M. Okamoto (“Plaintiff”) filed a complaint (the “Complaint”) in The United States District Court for the District of Nevada alleging violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (the “FCRA”), against, inter alia, Bank of America, N.A. (“BOA”), Mutual of Omaha Bank (“MOB”), and Experian Information Solutions, Inc. (collectively, “Defendants”).  See Okamoto v. Bank of America et al., No. 2:15-cv-01800-GMN-GWF (Sept. 18, 2015).

In the bankruptcy context, effectively appealing an order confirming a debtor’s plan of reorganization is not always a sure bet, as a court may refuse to entertain the appeal in the name of equitable mootness.  Equitable mootness – “a judge-made abstention doctrine that allows a court to avoid hearing the merits of a bankruptcy appeal because implementing the requested relief would cause havoc”

Recently, U.S. Customs and Border Protection (CBP) took a new, creative tack in a long struggle with importers regarding application of the “deemed liquidation” statute, 19 U.S.C. § 1504, to entries subject to antidumping and countervailing duties (AD/CVD). Importers need to be aware that CBP is now taking the dubious position that it is entitled to “reliquidate” a “deemed liquidated” entry at any time, so long as it gives notice to the importer of the “deemed liquidation” and then reliquidates the entry within 90 days after the date of the notice.

Section 546(e) of the Bankruptcy Code offers a strong defense for holders of bonds, notes and other securities to preference and fraudulent transfer actions brought in bankruptcy proceedings. Essentially, any payment made to settle or complete a securities transaction, including repurchases and redemptions of bonds, notes and debentures, is protected from avoidance under the Bankruptcy Code. For many years, however, this powerful defense was rarely used. When the defense was raised, it was usually in the context of protecting payments made in leveraged buy-outs.

Can a secured creditor decide not to participate in a bankruptcy proceeding and thereby avoid any impact the bankruptcy may have on its lien? According to a recent decision by the United States Court of Appeals for the Fifth Circuit in S. White Transp., Inc. v. Acceptance Loan Co., 2013 WL 3983343 (5th Cir. Aug. 5, 2013), the answer appears to be that at least in the Fifth Circuit, the secured creditor can avoid the impact a bankruptcy plan has on its lien by simply declining to participate in the bankruptcy proceeding.