On January 17, 2013, in a lengthy and closely reasoned opinion,¹ Judge Sean Lane of the Bankruptcy Court for the Southern District of New York authorized American Airlines, Inc. (“American”) to repay $1.3 billion in debt without payment of a make-whole premium over the objection of U.S.

On August 2, 2012, in the case ofIn re MBS Management Services, Inc.,¹ the Court of Appeals for the Fifth Circuit ruled that a retail electricity agreement with a real estate management company constituted a forward contract protected by the “safe harbor” provisions of the U.S. Bankruptcy Code (“Bankruptcy Code”).

In a decision further defining when US public policy restricts the relief a court may grant in aid of a foreign restructuring or insolvency proceeding, the Bankruptcy Court in the Chapter 15 case of Vitro, S.A.B. de C.V. v. ACP Master, Ltd. (In re Vitro, S.A.B. de C.V.), Ch. 15 Case No. 11-33335-HDH-15, 2012 WL 2138112 (Bankr. N.D. Tex. Jun. 13, 2012) refused to a enforce a Mexican restructuring plan that novated and extinguished the guaranty obligations of the Mexican debtor’s non-debtor subsidiary guarantors.

Whether a secured creditor has an absolute right to credit bid at a sale under a chapter 11 plan has been the subject of conflicting decisions rendered by the Third, Fifth and Seventh Circuits.¹ The United States Supreme Court has resolved these inconsistent rulings with its decision in RadLAX Gateway Hotel, LLC, et al., v. Amalgamated Bank, ² which affirmed the Seventh Circuit’s holding that a secured creditor has an absolute right to credit bid in a sale under a chapter 11 plan.

Yesterday, the Supreme Court of the United States ruled that a Chapter 11 plan that provides for the sale of assets free and clear of a creditor’s lien must allow the creditor to “credit bid” at the sale. In upholding the Seventh Circuit’s decision,¹RadLAX Gateway Hotel, LLC v. Amalgamated Bank resolved the circuit split on this issue between the Seventh Circuit, on the one hand, and the Third and Fifth Circuits, on the other.

BANKRUPTCY CODE

Nearly a year has passed since the Supreme Court held, in Stern v. Marshall,¹ that bankruptcy courts may not determine a potentially broad range of “private rights” disputes arising in bankruptcy proceedings. Lower courts have grappled with the practical implications of Stern, but it is not yet clear whether the decision will ultimately result in a significant curtailment of bankruptcy court power or prove narrower in application.

Section 541(a) of the Bankruptcy Code creates a worldwide estate comprising all of the legal or equitable interests of the debtor, “wherever located,” held by the debtor as of the filing date.¹ The Bankruptcy Code’s automatic stay, in turn, applies “to all entities” and protects the debtor’s property and the bankruptcy court’s jurisdiction by barring “any act to obtain possession of property of the estate . . .

On March 1, 2012 a number of important changes to the insolvency regime in Germany came into force.¹ The main objective of the reforms is to facilitate the restructuring of companies and to enhance creditor’s involvement. The German government believes – in light of the recent financial crisis – that these reforms are necessary to facilitate complex restructurings.

NEW PRELIMINARY CREDITORS’ COMMITTEE

Voicing concern about the Rural Utilities Service’s (RUS) oversight of federal loans for rural broadband network projects, six members of the House Energy and Commerce Committee wrote to RUS Administrator and former FCC Commissioner Jonathan Adelstein to request information on a $267 million loan granted by the RUS to Open Range Communications, a regional broadband service provider that filed for Chapter 11 bankruptcy protection last month. The RUS funds approved for Open Range during the administration of President George W.

FairPoint Communications’ 2008 purchase of New England landlines from Verizon Communications is the subject of a $2 billion fraudulent transfer lawsuit, filed late last week by a litigation trust formed by FairPoint creditors, who claim that the $2.3 billion acquisition forced FairPoint into bankruptcy just 18 months later. North Carolina-based FairPoint, which emerged from bankruptcy in January but continues to struggle financially, provides wireline telephony and Internet services to nearly two million customers in 18 states.