In April 2010, we reported on the decision of the Ontario Superior Court of Justice (the “Superior Court”) in In the Matter of the Proposal of C.I.F. Furniture Limited (“CIF”) which dealt with the question of circular priorities. This decision was recently upheld by the Ontario Court of Appeal (“Court of Appeal”). The Court of Appeal’s decision will offer some comfort to lenders where intercreditor agreements exist between some but not all of the secured lenders of a borrower.

On February 11, 2011, the Hon. Alan Gold of the United States District Court for the Southern District of Florida reversed the October 30, 2009 fraudulent conveyance finding issued by the Bankruptcy Court in the TOUSA case as it pertained to lenders involved in TOUSA’s Transeastern joint venture.

On August 28, 2010, Compañía Mexicana de Aviación (“Mexicana”), the third oldest airline in the world and one of the most important airlines in Latin America, stopped flying.

Section 507(b) of the Bankruptcy Code provides that if a secured creditor receives “adequate protection” for its interest in collateral held by a debtor, but that adequate protection ultimately proves insufficient, then the creditor is entitled to a “superpriority” administrative expense claim sufficient to cover any uncompensated diminution in the value of that collateral.

In Bank of America, N.A. v. Lehman Brothers Holdings Inc., Case No. 08-01753 (Bankr. S.D.N.Y. Nov. 16, 2010), the Bankruptcy Court of the Southern District of New York was called on to decide whether Bank of America, N.A. (“BOA”) effectuated an improper setoff of $500 million shortly after Lehman Brother Holdings Inc. (“Lehman” or “LBHI”) filed its petition on September 15, 2008 (the “Petition Date”), and whether the setoff violated the automatic stay.

In a recent opinion, JELD-WEN, Inc. v. Van Brunt (In re Grossman’s Inc.), 607 F.3d 114 (3d Cir. 2010), the United States Court of Appeals for the Third Circuit overruled its prior decision in Avellino & Bienes v. M. Frenville Co. (In re Frenville Co.), 744 F.2d 332 (3d Cir. 1984), which adopted the accrual test, a standard for determining the existence of a “claim” under the Bankruptcy Code.

In the last eighteen months, two Major League Baseball teams, the Chicago Cubs and the Texas Rangers, were sold in bankruptcy. Although both teams engaged in very similar processes leading up to their respective bankruptcy filings, the bankruptcy cases took very divergent paths.

In a decision that may come as a surprise to many, the Court of Chancery of the State of Delaware (the “Court”) recently dismissed a derivative suit brought by a creditor on behalf of an insolvent limited liability company. See CML V, LLC v. Bax et al., 6 A.3d 238 (Del. Ch. 2010)(JetDirect Aviation Holdings, LLC, Nominal Defendant).

It is well established that the automatic stay imposed under section 362 of the United States Bankruptcy Code (the “Bankruptcy Code”) in a typical bankruptcy case applies extraterritorially. Thus, creditors of a Chapter 11 debtor are generally prohibited from exercising any remedies against a debtor or its assets anywhere in the world. Up until recently, no court had addressed the scope of the stay applicable in a Chapter 15 case.

In the Ontario case of Re Xerium Technologies Inc., the Superior Court of Justice (the “Ontario Court”) was asked to recognize an order made by the U.S. Bankruptcy Court for the District of Delaware (the “U.S. Court”) approving a prepackaged plan of reorganization (the “Plan”) of the debtors, Xerium Technologies Inc. and its subsidiaries (collectively, “Xerium”), made under Chapter 11 of the United States Code (the “U.S. Bankruptcy Code”).