On June 7th, the Eleventh Circuit affirmed the entry of summary judgment dismissing Chapter 13 debtors' claims against Wells Fargo, which holds debtors' mortgages. Debtors alleged that Wells Fargo violated the Bankruptcy Code's automatic stay provisions by recording in its internal records the fees it incurred to file its proof of claim. The Eleventh Circuit held that Wells Fargo did not violate the automatic stay because it had not collected or attempt to collect those fees. Similarly, a claim based on Wells Fargo's failure to disclose the fees was not yet ripe for action.

The Supreme Court of Canada decision in Century Services Inc. v. Canada (Attorney General), which arose from the restructuring proceedings of Ted LeRoy Trucking Ltd. and was released on December 6, 2010, is a landmark decision in Canadian insolvency law.

On April 21st, the Federal Reserve Board requested comment on two bankruptcy-related studies. The Dodd-Frank Act requires the Federal Reserve Board to study the resolution of financial companies under Chapter 7 or Chapter 11 of the U.S. Bankruptcy Code. The Dodd-Frank Act also requires the Federal Reserve Board to study international coordination of the resolution of systemically important financial companies under the Bankruptcy Code and applicable foreign law.

On April 18th, the FDIC released a report examining how it could have structured an orderly resolution of Lehman Brothers Holdings Inc. under the orderly liquidation authority of the Dodd-Frank Act had that law been in effect at the time.

In a client update released earlier this month, we discussed the recent decision of the Ontario Court of Appeal in the CCAA proceedings of Indalex Limited. In that case, the Court decided that Indalex’s pension plan wind-up deficiency claims had priority over Indalex’s CCAA secured lender in the context of that case. Of concern is the "chill" that decision may have on secured lending in Ontario to borrowers that sponsor defined benefit pension plans.

On April 7th, a federal bankruptcy court sanctioned Lender Processing Services, Inc., a home foreclosure service provider against whom the Federal Reserve Board and OCC have initiated enforcement action. The opinion explains LPS's business model and that model's failings, and cites case law documenting LPS's historic shortcomings. It reminds litigants that proving a default is the lender's, not counsel's, responsibility. In re Ron Wilson, Sr.  

On April 12th, a federal district court addressed the in pari delicto defense, including the sole actor exception to the adverse interest exception. In the instant case, a litigation trust created in bankruptcy court to pursue the debtor's claims sued Credit Suisse for allegedly assisting the debtor's founders' looting of the debtor's subsidiaries. Credit Suisse sought summary judgment, asserting the in pari delicto defense. The Court agreed, finding that the evidence supported the conclusion that the founders so dominated the subsidiaries that the subsidiaries lacked a separate existence.

This week, the Ontario Court of Appeal surprised many by deciding that in the context of the CCAA proceedings of Indalex, pension plan deficiency claims can have priority over security held by secured DIP lenders. The Court granted priority for the entire wind-up deficiency of two pension plans over the DIP lender’s security. If not reversed on appeal, the ruling creates a potential worst case scenario for secured lenders in Ontario and could affect availability of credit for all employers who provide defined benefit pension plans for their employees.

On March 15th, the FDIC published for comment a proposed rule that would establish the priority of payments to creditors when the FDIC acts as liquidator for a failed non-bank financial institution. The proposal also would establish the procedures for filing a claim with the receiver and clarifies the receiver's clawback authority. Comments should be submitted within 60 days after publication in the Federal Register, which is expected during the week of March 21.

FDIC Proposes Rules for the Recoupment of Compensation from Executives of Failed Financial Institutions I hope this does not apply to any of you, but on Tuesday, the Board of Directors of the Federal Deposit Insurance Corporation (FDIC) approved a Notice of Proposed Rulemaking (NPR) to clarify application of the orderly liquidation authority contained in Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act, "Orderly Liquidation Authority" (OLA).