A recent decision in the bankruptcy case of Fisker Automotive Holdings, Inc., et al. has called into question a long-held belief that secured creditors hold dear: that debt purchased at a discount can nonetheless be credit bid at its full face amount at a collateral sale. While it remains to be seen how other courts will interpret Fisker, this decision has the potential to restrict participation in Bankruptcy Code section 363 sales and dampen liquidity in the robust secondary markets.
On January 14, 2014, Judge Robert E. Gerber of the United States Bankruptcy Court for the Southern District of New York in Weisfelner v. Fund 1. (In re Lyondell Chemical Co.), Adv. Proc. No. 10-4609 (REG), 2014 WL 118036 (Bankr. S.D.N.Y. Jan.
In Simon v. FIA Card Services, N.A.,[1] the U.S.
On December 5, 2013, the U.S. Bankruptcy Court for the Eastern District of Michigan released its 143 page decision upholding the City of Detroit’s eligibility to be a debtor under chapter 9 of the United States Bankruptcy Code. In re City of Detroit, Michigan, Case No. 13-53846 (Bankr. E.D. Mich. Dec.
Recently, in connection with the bankruptcy case of KB Toys, the Third Circuit Court of Appeals disallowed a claim held by a claim purchaser, citing that the original holder of the claim had received a preference payment prior to the bankruptcy case.1 The ruling affirmed an earlier decision of the Delaware Bankruptcy Court, which we discussed in a previous memorandum2, in which the Bankruptcy Court held that (i) a claim in the hands of a transferee has the same rights and disabilities as the claim had in the hands of the original claimant; and (ii) disabilities attach t
On November 8, 2013, three monoline insurers of the City’s general obligation bonds commenced adversary proceedings in the City of Detroit bankruptcy case.1 Through these actions, the monoline insurers seek to compel enforcement of the status quo for the general obligation bonds by requiring the City to continue to segregate ad valorem taxes in accordance with Michigan law. As these actions progress, they may clarify whether state law protections for general obligation bonds apply in chapter 9 and test the jurisdictional limitations imposed on a bankruptcy court by se
On October 16, 2013, the U.S. Bankruptcy Court for the Central District of California ruled that the City of San Bernardino is eligible for protection under chapter 9 of the Bankruptcy Code. In re City of San Bernardino, Cal., Case No. 12-28006, 2013 WL 5645560 (Bankr. C.D. Cal. Oct. 16, 2013).
On September 26, 2013, Judge Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan denied the Official Committee of Retirees’ (the “Committee”) motion to stay all eligibility proceedings pending its motion to withdraw the reference. In re City of Detroit, Michigan, Case No. 13-53846, ECF No. 1039 (Bankr. E.D. Mich. Sept.
On July 24, 2013, Judge Steven W. Rhodes of the Bankruptcy Court for the Eastern District of Michigan approved the City of Detroit’s motion to extend the automatic stay to various non-debtor parties, including certain state officials. The Court’s ruling effectively stays all pending litigation against the City, allows the City to continue to move forward with its chapter 9 case, and paves the way for a dispute over the City’s eligibility to file for chapter 9.
The Chapter 9 Filing and the State Court Litigation