In a recent decision that has captured the attention of the U.S. secondary loan market, the United States District Court for the Western District of Washington starkly concluded that hedge funds “that acquire distressed debt and engage in predatory lending” were not eligible buyers of a loan under a loan agreement because they were not “financial institutions” within the Court’s understanding of the phrase.

WHAT IS FATCA?

A recent case heard before the Royal Court in Guernsey has provided clear guidance on the application of the principle of modified universalism to insolvency matters in Guernsey.

A recent decision in the bankruptcy case of Fisker Automotive Holdings, Inc., et al. has called into question a long-held belief that secured creditors hold dear: that debt purchased at a discount can nonetheless be credit bid at its full face amount at a collateral sale. While it remains to be seen how other courts will interpret Fisker, this decision has the potential to restrict participation in Bankruptcy Code section 363 sales and dampen liquidity in the robust secondary markets.

The Royal Court has recently given clear guidance on the application of the principle of modified universalism to insolvency matters in Guernsey. The case of EFG Private Bank (Channel Islands) Ltd  v. BC Capital Group (in liquidation) & Ors [34/2013] will have significant consequences for cross- border insolvencies with a Guernsey element, as it sets out for the first time the principles which the Royal Court should consider when assessing the nature and extent of its obligation to provide “active assistance” to foreign insolvency proceedings.

Recently, in connection with the bankruptcy case of KB Toys, the Third Circuit Court of Appeals disallowed a claim held by a claim purchaser, citing that the original holder of the claim had received a preference payment prior to the bankruptcy case.¹ The ruling affirmed an earlier decision of the Delaware Bankruptcy Court, which we discussed in a previous memorandum², in which the Bankruptcy Court held that (i) a claim in the hands of a transferee has the same rights and disabilities as the claim had in the hands of the original claimant; and (ii) disabilities attach t

An important decision by Judge Kevin Carey of the United States Bankruptcy Court for the District of Delaware recently focused the distressed debt market (and financial creditors in general) on the proper legal characterization of a common financing provision — the “make-whole premium.”¹ Judge Carey allowed a lender’s claim in bankruptcy for the full amount of a large make-whole premium, after denying a motion by the Unsecured Creditors’ Committee to disallow the claim.

 WHY DOES THIS DECISION MATTER?

The U.S. bankruptcy claims trading market has grown in recent years, from one with a few specialized firms investing in small vendor trade claims into a multibillion dollar industry. Major investment banks and hedge funds now regularly buy and sell claims arising from a variety of transactions, including swap terminations, litigation judgments, debt issuances and rejected real estate and equipment leases. With individual claim amounts frequently in the millions (and sometimes billions) of dollars, the volume of claims bought and sold has increased significantly.

On 24 October 2012 the UK Supreme Court handed down its highly anticipated decision on the enforceability of foreign judgments in the case of Rubin v. Eurofinance S.A. [2012] UKSC 46, reversing the previous judgment of the Court of Appeal which had significantly altered the landscape of cross-border insolvency.

The ISDA Master Agreement¹ serves as the basis for the vast majority of overthe- counter derivatives transactions. Two fundamental principles of the ISDA Master Agreement are: (1) upon the default of one party to a swap, the nondefaulting counterparty may terminate the swap, calculate its loss and claim damages; and (2) the obligation of each party to a swap to make payments to the other is subject to the satisfaction of the conditions precedent that no default has occurred with respect to the other party.