Over recent years in this economic climate, it has been increasingly common for distressed companies to be sold in an effort to rescue the entity. On first blush, this seems a relatively simple exercise although care is required to ensure that no unexpected tax charges arise, especially if there is restructuring of the debt. The taxation rules governing the end of business life are varied and complex and the sooner that thought is given to taxation in respect of the insolvent company the better this will be for the seller, the remaining group and for any buyer.

Despite having more than its fair share of failed banks, Florida has not been a hotbed of D&O litigation. On November 9th, the FDIC filed only its second lawsuit against former directors of a failed banking institution. The defendants here are former directors of Century Bank, FSB (Sarasota, FL), which was placed into receivership in mid-November 2009.  A copy of the FDIC’s complaint is available here.

After failed court-ordered mediation, Hostess Brands, Inc. – makers of iconic bakery goods that include Twinkies, Ding Dongs, Ho Hos and Wonder Bread – received permission from a bankruptcy court to cease operations and liquidate last week.

So, what does the impending liquidation of Hostess have to do with employee benefits? Well, one of the largest issues facing Hostess has been crippling union pension contributions, which have been reported as high as $1 billion.

In a previous Alert that we published in July 2012 entitled “Michigan Court Authorizes Receiver Sale of Real Property Free and Clear of Redemption Rights,” we reported on a decision of a Michigan trial court in Ottawa County, Michigan permitting a state-court receiver to sell real property free and clear of a mortgagor’s redemption rights.

In a fairly controversial decision from January 2012, the United States Bankruptcy Court for the Central District of Illinois held that a financing statement must contain the “legal” name of an individual as it appears on the individual’s birth certificate. Miller v. State Bank of Arthur (In re Miller), Adv. P. No. 11-9055 (Bankr. C.D. Ill. Jan. 6, 2012). On appeal, the United States District Court for the Central District of Illinois reversed and held that the Uniform Commercial Code requires only that a “correct” name appear on the financing statement.

Indiana Code Section 32-28-3-9, often referred to as the Personal Liability Notice (PLN) Statute, provides a means for subcontractors, equipment lessors, and laborers to assert a claim against a project owner for amounts owed for labor and material on a construction project. Essentially, the PLN Statute provides a means to assert a lien against funds the owner would otherwise pay to a general contractor, as contrasted to asserting a mechanic’s lien claim against real estate.

The Indiana Court of Appeals recently held in a published opinion that the appointment of a receiver for the benefit of a mortgagee who agreed to subordinate its mortgages was mandatory under Indiana law. PNC Bank, Nat’l Assoc. v. LA Dev., Inc., __ N.W.2d __, 2012 WL 3156539 (Ind. Ct. App. Aug. 6, 2012).

Like the common law of most other states, Michigan law generally grants to a court-appointed receiver a first priority claim in the receivership proceeding for payment of the receiver’s fees and expenses incurred in that proceeding. See, e.g., In re Dissolution of Henry Smith Floral Co., 260 Mich. 299, 244 N.W. 480 (1932); Cohen v. Cohen, 125 Mich. App. 206, 335 N.W.2d 661 (1983).

The United States Bankruptcy Court for the Western District of Michigan recently held in a published opinion that no statutory or common law landlord’s lien exists under Michigan law. Rather, in order for a landlord to assert a valid lien on the personal property of its tenant, the tenant must have consensually agreed to grant a security interest in the property and the landlord must have perfected such interest in accordance with Article 9 of the Uniform Commercial Code. In re Kentwood Pharmacy, LLC, ___ B.R. ___, 2012 WL 2899383 (Bankr. W.D. Mich. July 17, 2012).

The Seventh Circuit Court of Appeals recently held that the rejection of a trademark license by the trustee did not abrogate the licensee’s rights under a prepetition agreement to use the debtor’s trademark. Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC, __F.3d __, 2012 WL 2687939 (7th Cir. July 9, 2012). The Seventh Circuit decision is contrary to a prior decision by the Fourth Circuit in Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985).