WorldSpace, a key provider of satellite radio services to customers living in ten European, African and Asian nations, filed for Chapter 11 protection last Friday before the U.S. Bankruptcy Court in Wilmington, Delaware, listing assets of $307.4 million against debts of $2.12 billion.

On September 15, 2008, Lehman Brothers Holdings Inc. (“LBHI”) filed for protection under chapter 11 of the United States Bankruptcy Code in New York. The case bears the caption In re Lehman Brothers Holdings Inc., Case No. 08-13555, and has been assigned to Judge James M. Peck. Notably, the only Lehman entity thus far to file for chapter 11 protection is LBHI; neither the main “broker dealer” (Lehman Brothers, Inc.) nor other subsidiaries of Lehman filed for U.S. bankruptcy protection. However, Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.

Resolving a split among various circuits, the United States Supreme Court has ruled that the exemption from state stamp taxes under section 1146(a) of the Bankruptcy Code does not apply to asset sales under section 363 of the Bankruptcy Code that took place before confirmation of a debtor’s chapter 11 plan—an event that may take months or years to accomplish.1

In a recent decision,1 Judge Sweet of the United States District Court for the Southern District of New York affirmed a bankruptcy court decision and refused to recognize under chapter 15 of the Bankruptcy Code either as “foreign main proceedings” or as “foreign nonmain proceedings” the well-publicized liquidations brought in the Grand Court of the Cayman Islands by two Bear Stearns hedge funds (the “Funds”).

If you thought, like many, that the Delaware Supreme Court’s decision in Trenwick Am. Litig. Trust v. Billet, 2007 Del. LEXIS 357 (Del. 2007), put the theory of “deepening insolvency” to rest, once and for all, well, think again. A recent decision, George L. Miller v. McCown De Leeuw & Co. (In re The Brown Schools), 2008 Bankr. LEXIS 1226 (Bankr. D. Del. April 24, 2008), from the United States Bankruptcy Court for the District of Delaware shows that “deepening insolvency” endures, albeit in reduced form.

On 14 March 2008 the Court of First Instance (CFI) issued two orders rejecting applications for interim measures by two subsidiaries of a Polish steel producer (Buczek) to suspend the application of a Commission recovery decision pending the final judgment in the case. Between 1997 and 2003 Poland was granted a derogation from the general prohibition on restructuring aid to the steel sector. The derogation was conditional upon Poland implementing a restructuring plan. Aid was provided to Buczek, who failed to properly implement its restructuring plan and went bankrupt in 2006.

It is clear from the recent collapse of Bear Stearns that the real impact of the credit crunch is now being felt. With this in mind, how can landlords and tenants of commercial properties prepare themselves for a potential rise in the number of corporate insolvencies?

Landlords’ remedies – think outside the box

The landlord of a commercial property faced with an insolvent tenant will usually have two concerns:

On 14 February 2008 the German Federal Parliament deliberated a draft bill submitted by the Federal Ministry of Justice concerning the reform of Germany’s insolvency law. The draft bill envisions, in particular, regulation for stability against insolvency (Insolvenzfestigkeit) for licence agreements.

With commentators predicting that the real impact of last summer’s credit crunch on corporate liquidations has yet to be felt, how can landlords and tenants of commercial properties prepare for a potential rise in the number of corporate insolvencies?

LANDLORDS’ REMEDIES - THINK OUTSIDE THE BOX

The landlord of a commercial property faced with an insolvent tenant will usually have two concerns:

In a recent decision1 in a claims objection proceeding in the Solutia chapter 11 case, the Bankruptcy Court for the Southern District of New York set clear limits on the allowance of secured claims.