Empty units, falling yields and the spectre of tenant defaults are increasingly common issues that landlords have had to face in the current recession. To add to this landlords have also had to confront a number of high profile CVAs including JJB Sports (twice), Blacks Leisure, Stylo Group, Focus DIY, Fitness First and Travelodge to name a few.

A few weeks ago, the Sixth Circuit affirmed the Western District Court of Michigan’s holding in U.S. v. Quality Stores Inc., 424 B.R. 237 (W.D. Mich. 2010), that severance payments made to employees pursuant to an involuntary reduction in force were not “wages” for Federal Insurance Contribution Act (“FICA”) tax purposes. U.S. v. Quality Stores Inc., No. 10-1563 (6th Cir. 2012). The Sixth Circuit’s decision creates a circuit court split with the Federal Circuit and its 2008 decision in CSX Corporation v. United States, 518 F.3d 1328 (Fed. Cir. 2008).

On September 14, the Sixth Circuit affirmed the trial court's finding that a failed bank's parent did not make a capital maintenance commitment to the bank. After the parent filed for bankruptcy, the FDIC was appointed receiver for the bank. The FDIC then sought payment from the parent under the statute requiring a party seeking reorganization to fulfill commitments to maintain the capital of an insured depository institution.

On August 20th, the U.S. Court of Appeals for the Tenth Circuit reversed a trial court's ruling finding that judgments against Ponzi scheme "net gainers" were non-dischargeable in bankruptcy. The debtors were early investors in what turned out to be a Ponzi scheme and received more money than they invested. When the Ponzi scheme was uncovered, the state State of Oklahoma sued the debtors for unjust enrichment but not for any securities violations. After the State obtained a judgment on the unjust enrichment claim, the debtors declared bankruptcy.

On July 16th, the National Futures Association ("NFA") announced it has requested that the Special Committee for the Protection of Customer Funds, consisting of the public representatives on NFA's Board of Directors, retain the services of a national law firm to conduct a careful internal review of NFA's audit practices and procedures, and the execution of those procedures in the specific instance of Peregrine Financial Group, to assure that the right procedures are in place and that they are being properly followed.

On March 15, 2012, the American Bar Association’s Electronic Discovery (ESI) in Bankruptcy Working Group (the “Working Group”) published an interim report addressing certain principles and suggested best practices for electronic discovery in bankruptcy cases (the “Interim Report”). The Working Group was formed to study and prepare guidelines or a “best practices” report on the scope and timing of a party’s obligation to preserve ESI in bankruptcy cases.

On June 22nd, the Federal Deposit Insurance Corporation ("FDIC") and the Treasury Department issued a final rule on the calculation of the maximum obligation limitation ("MOL"), as specified in the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). The MOL limits the aggregate amount of outstanding obligations that the FDIC may issue or incur in connection with the orderly liquidation of a covered financial company. The new rule is effective July 23, 2012.

As the prospects for business survival become ever tougher due to challenging economic conditions, administrators and liquidators are increasingly finding themselves having to justify to the courts whether or not costs should be treated as an expense of the administration or liquidation.

Sums incurred or paid as an expense of an administration or liquidation are, unlike debts incurred before the appointment of the administrator or liquidator, paid in preference to unsecured debts and also before the administrator or liquidator's fees and expenses.

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.

There have been a number of first instance decisions concerning the construction and effect of Section 2 (a) (iii) of the ISDA Master Agreement. The problem has been the conflicts between the various judgments, and in particular, with respect to the interpretation and effect of Section 2 (a) (iii). This has led to uncertainly as to how the Section is intended to operate.