On 31 July 2015, the English High Court delivered its judgments in the ‘Waterfall IIA’ and ‘Waterfall IIB’ cases. The decisions are important to stakeholders in determining key questions about how, following payment in 2014 of all the provable claims, the estimated £7.39-billion surplus (the ‘Surplus’) in Lehman Brothers International (Europe) (in administration) (‘LBIE’) will be shared amongst them. For others, the decisions may be of general interest in probing some rarely aired legal issues relating to the lower levels of the insolvency payment waterfall.
A lender’s appeal from an order confirming a Chapter 11 debtor’s cramdown reorganization plan is not equitably moot when the lender “diligently sought a stay” and the court could grant effective relief, held the U.S. Court of Appeals for the Ninth Circuit on July 1, 2015. In re Transwest Resort Properties, Inc., 2015 WL 3972917, at *1 (9th Cir. July 1, 2015) (2-1).
A bankruptcy court must dismiss a creditor’s involuntary bankruptcy petition when the debtor has raised a “legitimate basis” for disputing the petitioning creditor’s underlying claim, held the U.S. Court of Appeals for the Second Circuit on July 14, 2015. In re TPG Troy, LLC, 2015 WL 4220619, at *5 (2d Cir. July 14, 2015). The Second Circuit also affirmed the bankruptcy court’s award of $513,427 in attorney’s fees and costs to the vindicated debtor under Bankruptcy Code (“Code”) Section 303(i)(1). Id. at *6.
The claim of an insider lender (“L”) who invested “in a venture with substantial risk” and who loaned it additional funds on a secured basis to salvage its business should not be recharacterized as equity or subordinated on equitable grounds, held the U.S. Court of Appeals for the Tenth Circuit on June 12, 2015. In re Alternate Fuels, Inc., 2015 WL 3635366 (10th Cir. June 12, 2015) (2-1) (“AFI”).
Is market value sufficient proof of reasonably equivalent value for purposes of the good-faith-for-value defense under Texas law? The U.S. Court of Appeals for the Fifth Circuit certified that question to the Texas Supreme Court on June 30, 2015, after vacating its earlier decision in Janvey v. The Golf Channel, Inc., 2015 WL 3972216, at *3 (5th Cir. June 30, 2015).
A settlement providing for dismissal of a Chapter 11 case and distribution of estate property “that deviates from the Bankruptcy Code’s priority” scheme is permissible, held a divided panel of the U.S. Court of Appeals for the Third Circuit on May 21, 2015. Official Committee of Unsecured Creditors v. CIT Group/Business Credit Inc. (In re Jevic Holding Corp.), 2015 WL 2403443, at *1 (3d Cir. May 21, 2015) (2- 1) (“Jevic”).
The automotive industry has recently enjoyed a strong period of sales growth and productivity. But even during this period, some manufacturers and raw materials suppliers continue to face pressures presented by financially troubled customers and suppliers. Witness for example the recent chapter 11 filings of Lee Steel Corporation and Chassix Holdings, Inc.
The Bankruptcy Code prevents an individual debtor from discharging certain debts, including, upon request of the creditor, debts for “fraud or defalcation while acting in a fiduciary capacity.” 11 U.S.C. § 523(a)(4). The Seventh Circuit recently confirmed in Stoughton Lumber Co., Inc. v. Sveum, No.
By no means do we think that we might reliably predict the outcome of such a politically charged case as King v. Burwell, No. 14-114, the latest challenge to the Affordable Care Act.
A creditor’s guaranty claim “arising from equity investments in a debtor’s affiliate should be treated the same as equity investments in the debtor itself — i.e., … subordinated to the claims of general creditors,” held the U.S. Court of Appeals for the Fifth Circuit on April 28, 2015. In re American Housing Foundation, 2015 WL 1918854, at *8 (5th Cir. April 28, 2015).