Applicants who seek ex parte relief under the Companies’ Creditors Arrangement Act (CCAA) have an obligation to make full and fair disclosure of all material facts to the court.

Questions Standing of Indenture Trustees to Pursue Fraudulent Conveyance Claims

The Bankruptcy Code definition of “intellectual property” does not explicitly include “trademarks.”1 This has led to trademark licensees losing their rights to use the trademark upon rejection of the license in bankruptcy.

Almost every significant bankruptcy case eventually involves preference demands and litigation. Around this abundance of litigation developed a significant body of jurisprudence, to which Judge Sean Lane of the Southern District of New York Bankruptcy Court recently added in clarifying the ordinary course of business preference defense.

In recent years, second lien financings have increased in popularity. Senior creditors rely on intercreditor agreements to protect their interests by limiting the rights that junior lien holders would otherwise enjoy as secured creditors through either lien subordination, payment subordination, or both. Lien subordination requires the turnover to first lien creditors of proceeds of shared collateral until the first lien holders are paid in full.

Case Summary

This case presents a common scenario and dynamic that a party involved with a distressed bank holding company may have seen in the last several years.

On August 19, 2014, the Ontario Superior Court of Justice [Commercial List] (Ontario Court) released an important decision regarding the ability of unsecured bondholders to assert a claim for “post-filing” interest in proceedings under the Companies’ Creditors Arrangement Act (Canada) (CCAA). The CCAA is Canada’s principal statute for the restructuring of large insolvent corporations and is similar in effect to Chapter 11 of theUnited States Bankruptcy Code (Bankruptcy Code).

Many indentures contain “make-whole provisions,” which protect a noteholder’s right to receive bargained-for interest payments by requiring compensation for lost interest when accrued principal and interest are paid early. Make-whole provisions permit a borrower to redeem or repay notes before maturity, but require the borrower to make a payment that is calculated to compensate noteholders for a loss of expected interest payments.

In an opinion filed on July 3, 2014, in the case of In re Lower Bucks Hospital, et al., Case No. 10-10239 (ELF), the United States Court of Appeals for the Third Circuit (Third Circuit) affirmed a decision of the United States Bankruptcy Court for the Eastern District of Pennsylvania (Bankruptcy Court), which denied approval of third-party releases benefitting The Bank of New York Mellon Trust Company, N.A., in its capacity as indenture trustee (BNYM, or the Trustee).

On May 28, 2014, the District Court for the Southern District of New York affirmed an order from the bankruptcy court in Dishi & Sons v. Bay Condos LLC, et al.¹, approving a sale of the Debtor’s assets, but found that the Debtor’s commercial tenant was entitled to remain in possession of the premises for the remainder of the lease at the specified rent.