On March 20, 2014, the Court of Appeals for the Eighth Circuit issued an important decision in Stoebner v. San Diego Gas & Electric Co. (In re LGI Energy Solutions Inc.), No. 12-3899, Slip Op. (8th Cir. Mar. 20, 2014) that expands the scope of the “subsequent new value” defense in lawsuits seeking to clawback alleged preference payments.
On March 7, the Spanish government reformed its bankruptcy law to encourage companies to restructure their debt and avoid liquidation. The decree is one part of an ongoing reform program intended to strengthen and stabilize the Spanish financial sector. The reforms provide stronger incentives for lenders to accept write-offs, maturity extensions, and debt forgiveness for struggling companies. The new rules also reduce the majority of creditors needed to vote for a restructuring.
It seems that most bankruptcy decisions by the U.S. Supreme Court involve individual debtors, and the Supreme Court’s latest opinion is no exception. Even though the decision is not in a business bankruptcy case, it examines the bankruptcy court’s powers under Section 105(a) of the Bankruptcy Code.
Last Friday, Judge Sleet of the U.S. District Court for the District of Delaware denied Hybrid Tech Holdings LLC’s appeal of the Delaware bankruptcy court’s decision in In re Fisker Automotive Holdings, Inc. et al, to (i) cap Hybrid Tech’s credit bid for Fisker Automotive’s assets, and (ii) require that the assets be sold via a public auction rather than directly to Hybrid Tech in a private sale.
According to a recent report issued by the American Bankruptcy Institute, there was a 24 percent drop in business bankruptcy filings in the United States last year, resulting in the fewest filings since 2006. The larger corporate filings in 2013 were not the typical “mega” filings of years past. Unlike Lehman, Chrysler, Tribune, MF Global and others, the chapter 11 “mega-cases” filed in 2013 were smaller and less well known in the general business community. Among the more prominent were Cengage Learning, Excel Maritime, and Exide Technologies.
On January 14, 2014, Judge Robert E.
A New York bankruptcy court has ruled that certain victims of Bernard Madoff’s highly publicized Ponzi scheme are not entitled to adjust their claims to account for inflation or interest. Securities Investor Protection Corporation v. Bernard L. Madoff Investment Securities LLC, 496 B.R. 744 (Bankr. S.D.N.Y. 2013). The Madoff Liquidation Trustee brought the motion asking the court to determine that Madoff customers’ “net equity” claims did not include “time-based damages” such as interest and inflation under the Securities Investor Protection Act (“SIPA”).
On March 12, 2009, Gerald Rote and Annalisa Rote loaned $38,000 to their daughter and son-in-law to buy a home. The Rotes took a mortgage on the home but, to avoid the expense of publicly recording the mortgage, they did not immediately record it. Rather, they waited two years, until May 4, 2011, to record the mortgage. Seven months later, however, the daughter and son-inlaw filed a bankruptcy petition.
In a departure from other bankruptcy courts in the Third Circuit and her own recent prior opinion, U.S. Bankruptcy Chief Judge Mary France of the Middle District of Pennsylvania broadly interpreted the U.S. Supreme Court’s ruling in Stern v. Marshall, 564 U.S. 2 (2011), and held that a bankruptcy court lacks the constitutional authority to issue a final judgment in any fraudulent transfer action where the defendant (i) has not filed a proof of claim and (ii) has not consented to the bankruptcy judge entering a final judgment on the matter.
The Bankruptcy Code provides debtors in possession and other potential plan proponents with considerable flexibility to implement a plan under chapter 11. An important consideration is the preservation of potentially valuable causes of action held by the estate and the provision of a vehicle for post-confirmation prosecution of such claims.