In Wells Fargo Bank Northwest v. US Airways, Inc., 2011 NY Slip Op 52188(U) (Sup. Ct. N.Y. County Dec. 1, 2011), Justice Bernard J. Fried held that a liquidated damages provision requiring payment of a holdover fee equal to twice the monthly rent was reasonable and did not function as a penalty under New York contract law. The case arose from three aircraft sale and leaseback transactions, pursuant to which Defendant US Airways, Inc. (“US Airways”), sold to Plaintiff Wells Fargo Bank Northwest (“Wells Fargo”), and Wells Fargo leased back to US Airways, three Boeing 737 aircraft.

Responsive to issues faced with difficulty in obtaining financing by businesses (particularly small- to medium-size enterprises) due to the global financial crisis, State Administration of Industry and Commence officially released Administrative Measures for Corporate Debt-for-Equity Swap Registration (the “Measures”) recently, which formalizes regulation of debt-for-equity swap on the national level. The Measures will be put into implementation on January 1, 2012.

A recent Court of Appeal case confirms that the Foreign Judgments (Reciprocal Enforcement) Act 1933 does apply to judgments in insolvency matters and that the Insolvency Act 1986 can be used to enforce a foreign judgment.

In New Cap Reinsurance Corporation Ltd & Anr v AE Grant & Ors [2011] EWCA Civ 971, the Court of Appeal upheld the first instance decision of the Companies Court that a judgment obtained in Australia could be enforced in England under section 426 of the Insolvency Act (the IA) and at common law.

NEW CAP RE: THE FACTS

The House Judiciary Committee recently held a hearing to consider an amendment to the venue provisions of the Bankruptcy Code proposed by the Committee’s Chairman that would require corporations to file voluntary chapter 11 petitions in the district where they maintain their principal place of business or have their principal assets. Under the current bankruptcy venue provisions of the U.S. Code, a debtor corporation can file its bankruptcy case in the state where it is incorporated, where it has its principal assets, or where it is headquartered.

In In re Washington Mutual, Inc., No. 08-12229 (MFW), 2011 WL 4090757 (Bankr. D. Del. Sept.

As we previously report here, Ambac Financial Group, Inc. (“AFG”), the holding company for the bond insurer, Ambac Assurance Corp. (“AAC”), filed for bankruptcy in November 2010 after it was unable to raise additional capital or come to terms with its debt holders.

U.S. Bankruptcy Judge Martin Glenn of the Southern District of New York has approved a stipulation between bankrupt bookseller Borders Group Inc. ("Borders") and email marketer Next Jump Inc. ("Next Jump") that will require Next Jump, a former marketing partner of Borders, to stop emailing Borders' customers and remove Borders' trademarks from its website and email blasts.

In a recent ruling, the Fifth Circuit Court of Appeals rejected a per se rule that only corporate insiders can have their debt claims recharacterized as equity. Instead, in In re Lothian Oil Inc., 2011 WL 3473354 (5th Cir. Aug. 9, 2011), the Court of Appeals held that "recharacterization extends beyond insiders and is part of the bankruptcy courts' authority to allow and disallow claims under 11 U.S.C. § 502." Thus, all creditors, regardless of their insider status, are susceptible to having their claims recharacterized as equity.

The Facts of the Case

In New Cap Reinsurance Corporation Ltd & Anr v AE Grant & Ors, the Court of Appeal has upheld a first instance decision that section 426 of the Insolvency Act (IA) can be used to enforce a foreign monetary judgment in insolvency proceedings. However, the Court acknowledged that where there exists a statutory framework for the enforcement of foreign judgments, in this case enforcement pursuant to the Foreign Judgments (Reciprocal Enforcement) Act 1933 (the 1933 Act), then enforcement under s.426 of the IA must follow the requirements of the 1933 Act.

The case concerned credit default swaps entered into between Lehman Brothers Special Financing Inc., and various parties, and the rights of the parties in respect of collateral held by a trustee.