On May 14, 2012, the Third Circuit Court of Appeals in In re Heritage Highgate, Inc., et al., No. 11-1889 (3d Cir. May 14, 2012) clarified the burden of proof with respect to the valuation and ultimate allowance of alleged secured claims under Bankruptcy Code section 506(a).
In Senior Transeastern Lenders v. Official Committee of Unsecured Creditors (In re TOUSA, Inc.), the Eleventh Circuit Court of Appeals reinstated the decision of the United States Bankruptcy Court for the Southern District of Florida (the “Bankruptcy Court”) in which the Bankruptcy Court avoided the liens given by TOUSA’s subsidiaries to new lenders and permitted the recovery of the proceeds of the new loan from other TOUSA lenders that had taken the funds in repayment of their TOUSA guaranteed loans.
On May 15, 2012, the United States Court of Appeals for the Eleventh Circuit held that security interests and liens granted by subsidiaries of a borrower to refinance obligations owed to the borrower’s lenders constituted fraudulent transfers under section 548(a)(1) of the Bankruptcy Code in the borrower’s and subsidiaries’ bankruptcy cases.Senior Transeastern Lenders v. Official Committee of Unsecured Creditors (In re TOUSA, Inc.), 2012 WL 1673910 (11th Cir. 2012).
On May 11, 2012, the U.S. Court of Appeals for the Seventh Circuit issued a decision in BMD Contractors, Inc. v. Fidelity and Deposit Company of Maryland (No. 11-1345), affirming a lower court summary judgment in favor of a surety on a payment bond.
The United States Bankruptcy Court for the Central District of Illinois recently held that an Illinois mortgage is subject to avoidance in bankruptcy pursuant to 11 U.S.C. § 544(a)(3) unless the mortgage contains among other things, (i) the amount of the debt, (ii) the maturity date of the debt, and (iii) the underlying interest rate. Richardson v. The Gifford State Bank (In re Crane), Adv. Pro. No. 11-9067 (Bankr. C.D. Ill.).
Relying on the U.S. Supreme Court’s decision inAT&T Mobility LLC v. Concepcion, the Ninth Circuit Court of Appeals recently held that California’s rule against compulsory arbitration of claims for public injunctive relief was preempted by the Federal Arbitration Act (“FAA”). The Court also underscored the key points of an enforceable arbitration clause. Kilgore v. KeyBank (March 7, 2012).
Case Background
In their study published in February's issue of The Quarterly Journal of Economics, “Long-Run Impacts of Unions on Firms: New Evidence from Financial Markets, 1961–1999,” Princeton University Professor David Lee and University of California Professor Alexandre Mas estimated that an “average union effect on the equity value of the firm equivalent to $40,000 per unionized worker.” The professors noted that the loss was a combination of a transfer of wealth to workers and inefficiencies caused by the unions.
- Introduction
On Feb. 29, 2012, a Michigan citizens’ group opposed to the State of Michigan’s emergency financial manager law (officially entitled “Local Government and School District Fiscal Accountability Act,” MCL §§ 141.1501 et seq. and referred to herein as the “Act”), filed petitions to place the issue of the Act’s rejection on the state ballot in November.
A proposed bill entitled the Nonrecourse Mortgage Loan Act and recently introduced to the Senate for the State of Michigan would regulate the use and enforceability of certain loan covenants in non-recourse commercial transactions. Presumably, the bill, Senate Bill No. 992 introduced on Feb. 29, 2012 and referred to the Committee on Economic Development, is in reaction to a recent decision of the Michigan Court of Appeals finding a guarantor liable for a deficiency claim notwithstanding the non-recourse nature of the loan. See Wells Fargo Bank, NA v. Cherryland Mall Ltd.
In the most recent ruling in long-running litigation styled AMG National Trust Bank v. Ries, NO. 06-CV4337, 09-cv-3061 (E.D. Pa.) (decided Dec.