• On October 12, 2011, the Bankruptcy Court for the Southern District of New York brought TerreStar Network’s Chapter 11 bankruptcy proceeding one step closer to conclusion by approving the debtor’s $98 million settlement with two separate creditor groups over a certain purchase money credit agreement.

The House Judiciary Committee recently heard testimony on the benefits and pitfalls of proposed legislation that would change bankruptcy venue rules by imposing limitations on where corporations may file for bankruptcy protection. The hearing came in the wake of a statement by Judiciary Committee Chairman Lamar Smith, R-Texas, in which he asked how Enron had been able to file its bankruptcy case in Manhattan considering that Enron was based in, and had substantially all of its assets and operations in, Texas.

• On September 16, 2011, the U.S. Department of Justice amended its complaint to enjoin the AT&T/T-Mobile merger to include the states of New York, California, Illinois, Pennsylvania, Massachusetts, Washington, and Ohio as additional plaintiffs. United States v. AT&T Inc., No. 11-cv-1560 (D.D.C.).
• On September 19, 2011, the United Stated District Court for the Northern District of Texas largely denied the motion to dismiss of Verizon Communications, and related entities, against claims that they defrauded investors and creditors via spinoff company Idearc.

On September 13, 2011, the Federal Deposit Insurance Corporation approved a final rule requiring certain financial institutions to prepare a plan for their dismantling in the event of material financial distress or failure.

Employers are constrained by dozens of rules and regulations limiting their hiring criteria. In today’s economy, one question that often arises is whether employers may refuse to hire bankrupt job applicants. Surprisingly, the answer for private employers may be yes.

In a recent decision1 involving TerreStar Networks, Inc., and its affiliates (“TerreStar” or the “Debtors”), the United States Bankruptcy Court for the Southern District of New York held that the Debtors’ noteholders held a valid lien on the economic value of a license granted to TerreStar by the Federal Communications Commission (“FCC”) and that nothing in Article 9 of the New York Uniform Commercial Code (the “NYUCC”) or Section 552 of the Bankruptcy Code invalidated that lien.

The US Court of Appeals for the Ninth Circuit recently held that a creditor of a bankrupt corporation may assert alter ego claims against the corporation’s sole shareholders. The California Court of Appeals for the Second Appellate District not only supports the Ninth Circuit’s decision but has recently taken it one step further, holding that alter ego allegations are not even subject to the automatic bankruptcy stay.

The United States Bankruptcy Court recently denied confirmation of a bankruptcy plan even though it found that the plan's global settlement was "fair and reasonable."1 Why? Because the plan's releases were too broad and "unreasonable" for many of the constituents. The case provides a pointed lesson to creditors and debtors alike — pay attention to the releases; overdoing it may sink the whole ship.

Reclamation claimants have long enjoyed special protections under Bankruptcy Code section 546(c), which recognizes that “the rights and powers of a trustee... are subject to the right of a seller of goods,” including reclamation rights under Section 2-702 of the Uniform Commercial Code. At a minimum, Section 2-702 clearly requires that a reclamation claimant must make demand upon its buyer in order to reclaim its goods and protect its rights. However, Paramount Home Entertainment Inc. v. Circuit City Stores, Inc., 2010 WL 3522089 (ED Va., Sept.

On August 4, 2010, the New Jersey Superior Court, Appellate Division extended equitable principles previously applied in mortgage foreclosure cases to how far an unsecured judgment creditor could go to satisfy its lien against a debtor, deciding to follow a line of cases standing for the principal that “even in the absence of express statutory authorization, a court has inherent equitable authority to allow a fair market value credit in order to prevent a double recovery by a creditor against a debtor.” Moreover, in the case, MMU of New York, Inc. v.