On May 29, 2012, the Supreme Court of the United States, in the chapter 11 cases of RadLAX Gateway Hotel, LLC, and RadLAX Gateway Deck, LLC (the “RadLAX Cases”)1 held by a vote of 8-02 that a chapter 11 plan cannot be confirmed if the plan (i) is rejected by a class of secured claims, (ii) provides for the sale of collateral free and clear of liens securing such claims, and (iii) deprives the holders of such claims of the right to credit bid at the sale of collateral.
Whether post-death creditor protection is available to inherited IRAs under the 2005 Bankruptcy Act has been the subject of a number of cases decided in the last several years. The argument made by bankruptcy trustees is that, on the death of the IRA owner, the IRA ceases to be “retirement funds” as it is not the retirement funds of the beneficiary. Consequently, the bankruptcy trustees argue that the inherited IRA ceases to have the protection afforded to IRAs under the Bankruptcy Code.
Preliminary Remarks
On March 1, 2012, the Act for the Further Facilitation of the Restructuring of Companies (ESUG) came into effect. The main aim of the ESUG is to improve the prospects of an early and successful restructuring of distressed companies, to involve creditors in the selection process of the (preliminary) insolvency administrator and to improve the reliability and predictability of particular insolvency plan proceedings. The main changes of the ESUG to the current German insolvency law (InsO) comprise:
On 29 February 2012, the UK Supreme Court handed down its judgment concerning the treatment of client money in the long-running administration of Lehman Brothers International (Europe) (“LBIE”).
The absolute priority rule of Section 1129(b) of the Bankruptcy Code is a fundamental creditor protection in a Chapter 11 bankruptcy case. In general terms, the rule provides that if a class of unsecured creditors rejects a debtor’s reorganization plan and is not paid in full, junior creditors and equity interestholders may not receive or retain any property under the plan. The rule thus implements the general state-law principle that creditors are entitled to payment before shareholders, unless creditors agree to a different result.
Code Section 409A is, in part, a response to perceived deferred compensation abuses at companies like Enron and WorldCom. The story of Code Section 409A’s six month delay provision is inextricably tied to the Enron and WorldCom bankruptcies.
Following the failure of over 400 financial institutions since the beginning of 2008, the FDIC has clarified its expectations with respect to collection and retention of bank documents by directors and officers of troubled or failing financial institutions for the purpose of explaining or defending their conduct.
On December 29, 2011, the FDIC filed suit against seven former directors of the Bank of Asheville in the Western District of North Carolina seeking to recover over $6.8 million in losses suffered by the bank prior to receivership. All of the directors named as defendants were members of the bank’s Loan Committee, the committee responsible “for the amplification, implementation and administration of the loan policy” and “management of the lending function”. The Complaint cites 30 specific commercial real estate and business loans approved by the defendants between June 26, 2007 a
On October 31, 2011, the Honorable Kevin J. Carey, Bankruptcy Judge of the United States Bankruptcy Court for the District of Delaware, issued an opinion denying confirmation of two competing proposed plans of reorganization in the chapter 11 cases of In re Tribune Company, et al.
On April 26, 2011, the Supreme Court of the United States adopted a completely revamped version of Rule 2019 of the Federal Rules of Bankruptcy Procedure to govern disclosure requirements for groups and committees that consist of or represent multiple creditors or equity security holders, as well as lawyers and other entities that represent multiple creditors or equity security holders, acting in concert to advance common interests in a chapter 9 or chapter 11 bankruptcy case.