The First Chamber of the Supreme Court recently handed down a decision dealing with the constitutionality of one of the timeframes set by the Bankruptcy Law for filing a proof of claim in bankruptcy proceedings.
On May 10th, FDIC Acting Chairman Martin J. Gruenberg discussed the FDIC's authority to resolve failing systemically important financial institutions ("SIFIs"). Gruenberg outlined how the FDIC would implement its resolution authority, noting that it would place the institution in receivership, creating a bridge holding company for the SIFI's assets and investments. Shareholders and subordinated and unsecured creditors would be left in receivership, although some of the SIFI's debt would be converted into equity.
On April 30th, the FDIC issued a final rule that treats a mutual insurance holding company as an insurance company for purposes of Section 203(e) of the Dodd-Frank Act. The new rule clarifies that the liquidation and rehabilitation of a covered financial company that is a mutual insurance holding company will be conducted in the same manner as an insurance company.
Asbestos settlement trusts are a major source of payment of asbestos claims in the United States, with over fifty such trusts instituted as of March, 2011.1 While insurance recoveries are a principal source of funding for these trusts, courts generally have not allowed insurers to challenge chapter 11 plans where they are found to be “insurance neutral.” A plan is insurance neutral where the plan does not increase an insurer’s pre-petition liabilities or impair an insurer’s contractual rights under its insurance policies.
On April 5th, the Certified Financial Planner Board of Standards announced the approval of new rules regarding the disclosure of information concerning a CFP who has declared bankruptcy. CFP Board Announcement.
On March 28th, the House Oversight and Investigations Subcommittee held hearings on MF Global, whose October 2011 collapse has raised questions concerning the protection of customer money. In her prepared remarks MF Global's general counsel Laurie Ferber described the days and hours preceding the firm's bankruptcy filing, including the two wire transfers that some have seen as evidence that the firm improperly used customer money, and about which JP Morgan (the ultimate recipient of the funds), had questions.
Defanging Stern v. Marshall1: The United States District Court for the Southern District of New York Modifies the Reference of Bankruptcy Matters to Address Issues Resulting from the Supreme Court’s Ruling
A New York trial court recently held that affiliates and subsidiaries of a bankrupt Mexican holding company were liable as guarantors on indentures issued by the corporation, despite ongoing Mexican bankruptcy proceedings that could potentially discharge their liability under Mexican law. Wilmington Trust, National Assoc. v. Vitro Automotriz, S.A. De C.V., et al., No. 652303/11 (N.Y. Sup. Ct. 2011).
Although 2011 saw major decisions concerning many facets of bankruptcy law, perhaps no area of bankruptcy law drew as many high-profile decisions as the standards for confirming a chapter 11 plan of reorganization. We draw your attention to three particularly important 2011 decisions that are likely to heavily influence the contours of many future chapter 11 plans.
Designating Votes Not Cast in Good Faith
Chapter 15 of the Bankruptcy Code was enacted in 2005 to create a procedure to recognize an insolvency or debt adjustment proceeding in another country and to, in essence, domesticate that proceeding in the United States. Once a foreign proceeding is “recognized,” a step which cannot be achieved without a foreign representative satisfying various requirements, the foreign representative may obtain certain protections from a United Stated bankruptcy court, including the imposition of the automatic stay to protect the foreign debtor’s property in the United States.