Supreme Court of the State of New York, County of Monroe, July 15, 2021
Distressed transactions in bankruptcy court have become big business. Sales under Section 363 of the bankruptcy code provide predictability and reliability (in the form of a court order delivering “free and clear” assets) under even the most turbulent of circumstances. Commonly known simply as “363 sales,” these transactions can provide an opportunistic purchaser with significant upside under the right circumstances. But the truly opportunistic buyer will need to buckle up and be prepared to move with lightning speed in a highly competitive and transparent forum.
Though bankruptcy filings are down in 2021, the expiration of the Paycheck Protection Program and reopening of the courts nationwide could lead to a rise in bankruptcy filings with many businesses still struggling to cope with the economic and supply chain aftereffects of the pandemic and consumer purchasing habits. These bankruptcies, in turn, will have an inevitable ripple effect on creditors and other claimants, whose abilities to collect on claims and exercise rights, are significantly restricted by the automatic stay.
On June 10, the Federal Trade Commission (FTC) filed an amended complaint for civil money penalties and other relief under Section 5 of the FTC Act prohibiting “unfair or deceptive acts or practices” and Section 521 of the Gramm-Leach-Bliley Act (GLBA) prohibiting the use of fraudulent statements to obtain consumer information.
On June 17, 2021, President Biden signed Senate Bill 475 into law, making “Juneteenth” a federal holiday. Because June 19th (tomorrow) falls on a Saturday this year, the day will be observed by federal government offices on June 18, 2021 (today).
This new law, revising the list of federal holidays in the U.S. Code, will affect consumer credit lenders’ operations. It is important for lenders to review their processes to determine how this new holiday will impact their operations.
Asbestos bankruptcy trusts remain a topic frequently monitored and reported on Asbestos Case Tracker. As the first quarter of 2021 comes to a close, we have seen a number of changes to 11 trusts that will impact the amount of compensation available to individuals claiming asbestos-related injuries.
On March 3, 2021, the PROTECT Asbestos Victims Act, otherwise known as S.574, was introduced in the U.S. Senate by Senators Thom Tillis (R-NC), John Cornyn (R-TX), and Chuck Grassley (R-IA). This legislation attempts to reform the asbestos bankruptcy trust system by providing oversight of asbestos bankruptcy trusts, ensuring those harmed by asbestos receive fair and just compensation, and eliminating fraud and abuse within the trust system.
On September 2, 2020, the Fifth Circuit declined to void a fee award of nearly $2.3 million in favor of an employer that had prevailed on its trade secret theft claim against its former employee, because the employee willfully failed to comply with the bankruptcy court’s “extremely explicit” order regarding his objections to the award.
Background
U.S. District Court for the District of North Dakota
In Kotalik v. A.W. Chesterton Co., several defendants filed motions to enforce the plaintiffs’ compliance with disclosure requirements of North Dakota’s Asbestos Bankruptcy Trust Transparency Act. Counsel for the defendants as well as plaintiffs moved the court for a hearing on the issue. Lastly, plaintiffs’ counsel moved for a certification of a question to the North Dakota Supreme Court regarding the constitutionality of the Trust Transparency Act.
The Ninth Circuit on June 1 affirmed a key bankruptcy principle that liens may survive and “pass through” the bankruptcy process even if the underlying claim secured by the lien is disallowed. The facts in Lane v. The Bank of New York Mellon (Ninth Cir. Ct. Of Appeals, No. 18-60059, June 1, 2020) are all too familiar – a mortgage loan originated by Countrywide Home Loans wound up in a huge pool of securities with The Bank of New York Mellon serving as trustee for the certificate holders. Countrywide had endorsed the promissory note in blank, which made it payable to the bearer.