Trial begins today in the U.S. Bankruptcy Court in Detroit over whether the city of Detroit is even eligible for the Chapter 9 bankrupcty protection it sought earlier this year. The major point of contention is whether Detroit may, under the Michigan constitution, seek bankrupcty in a way that would reduce pension payments (as it would reduce payment to all its creditors).
As the controversy around the possible sale of the Detroit Institute of Arts’ collectioncontinues to swirl, Emergency Manager Kevyn Orr has given some of his most pointed comments to date about his expectations.
The United States Court of Appeals for the Second Circuit (the “Second Circuit”) recently followed the emerging trend of affording the safe harbor protections of section 546(e) of the Bankruptcy Code (the “Code”) to intermediary financial institutions acting as only conduits in otherwise voidable transactions.
An important qualifier to the discussion about deaccessioning and the Detroit Institute of Arts is that although DIA is a subdivision of the bankruptcy debtor (Detroit), that debtor is not any old commercial entity. Rather, Detroit is a municipality, and municipal and state debtors are governed by slightly different rules than private parties.
The recentfiling by the City of Detroit for bankruptcy—the largest such municipal filing in history—has brought with it an unexpected art law twist. Namely: to what extent can, or should the collection of the Detroit Institute of Arts be used to satisfy the city’s creditors. As one might expect, the differences between what the city can do, what it should do
Generally, license agreements are “executory contracts” in bankruptcy. Executory means performance is due from both sides. When a party to an executory contract becomes a debtor in bankruptcy, it may either reject or assume the contract. However, non-debtor parties (or “counterparties”) enjoy some protections, especially when the contract is a license agreement for intellectual property.
The basics.
The United States Court of Appeals for the Eleventh Circuit (the “Eleventh Circuit”) has reinstated the controversial 2009 decision of the United States Bankruptcy Court for the Southern District of Florida (the “Bankruptcy Court”) that required a group of lenders to disgorge $421 million as fraudulent conveyances under sections 548 and 550 of the Bankruptcy Code.
In re Innkeepers USA Trust, et al., -- B.R. --, 2011 WL 1206173 (Bankr. S.D.N.Y. 2011)
We reported to you last month a significant development in the matter of In re TOUSA USA, when the United States District Court for the Southern District of Florida issued its opinion and order reversing the controversial holdings of the Bankruptcy Court in the TOUSA chapter 11 case as to the so-called “Transeastern Lenders,” a group of lenders who had previously been ordered to disgorge nearly ½ billion dollars received in repayment of indebtedness which the Court found constituted a fraudulent transfer under Sections 548 and 550 of the Bankruptcy Code.