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Circuit split alert! Sixth and Ninth Circuits differ on whether consent among parties cures bankruptcy court’s lack of constitutional authority to enter final order

Overview

USA, Insolvency & Restructuring, Litigation, Thompson Hine LLP, Bankruptcy, Common law, Article III US Constitution, United States bankruptcy court, Sixth Circuit
Unanimous Supreme Court rules that chapter 11 debtors cannot use bankruptcy code’s “cramdown” provisions to eliminate a secured creditor’s right to credit bid

In a major victory for secured creditors, the United States Supreme Court, on May 29, 2012, unanimously held that a chapter 11 plan involving a sale of secured property must afford the secured creditor the right to credit bid for the property under section 363(k) of title 11 of the United States Code (the “Bankruptcy Code”).1 In so holding, the Supreme Court resolved the split that had emerged among the United States Circuit Courts of Appeals, as illustrated by the Seventh Circuit’s decision below,2 which contrasted with recent decisions from the Third and Fifth Circui

USA, Insolvency & Restructuring, Litigation, Thompson Hine LLP, Credit (finance), Debtor, Secured creditor, US Code, Title 11 of the US Code, Supreme Court of the United States, Seventh Circuit
Lender beware: TOUSA bankruptcy court holding reinstated

In October 2009, the court overseeing the TOUSA, Inc. bankruptcy cases in the Southern District of Florida (Bankruptcy Court) set off considerable alarm bells throughout the lending community when it unraveled a refinancing transaction as a fraudulent conveyance based upon, in primary part, the fact that certain subsidiaries of TOUSA, Inc. pledged their assets as collateral for a new loan that was used to repay prior debt on which the subsidiaries were not liable, and that was not secured by those subsidiaries’ assets.

USA, Florida, Banking, Insolvency & Restructuring, Litigation, Thompson Hine LLP, Bankruptcy, United States bankruptcy court
Chesterfield and Cherryland decisions bring uncertainty to mortgage loans

Introduction

USA, Banking, Insolvency & Restructuring, Thompson Hine LLP, Surety, Debtor, Mortgage loan, Default (finance)