Yesterday, the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law concluded its series of hearings on the ramifications of auto industry bankruptcies. Testifying before the committee were:

Panel I:

On Thursday, AIG announced a $4.35 billion loss for the first quarter of 2009, as compared to a net loss of $7.81 billion in the first quarter of 2008 and a net loss of $61.7 billion in the fourth quarter of 2008.

On Monday, the International Swaps and Derivatives Association, Inc. (ISDA) announced that it will issue a CDS auction protocol regarding the settlement of credit derivatives that reference Smurfit-Stone Consolidated Enterprise Inc. The protocol is a response to Smurfit-Stone’s recent filing for reorganization under Chapter 11 in the US Bankruptcy Court in Wilmington, Delaware.  

Recent case law reminds practitioners and lenders to pay careful attention when drafting prepayment premium provisions in debt instruments or risk having the premiums disallowed in a borrower’s bankruptcy case.

A recent New York court decision has cleared the way for lenders to seek recovery against non-recourse carve-out, or “bad boy,” guarantors during a pending mortgage foreclosure action if a borrower files for bankruptcy. In so doing, the court answered a question that, surprisingly, was thus far apparently unanswered in a reported decision in New York: whether New York’s “one action rule” under RPAPL § 1301 bars a lender from obtaining a money judgment against a “bad boy” guarantor for the debt if a mortgage borrower files for bankruptcy while a foreclosure action is underway.

The two most recent decisions of the Supreme Court involving federal taxes illustrate how a conservative approach to statutory interpretation tends to prevail, but only with great effort, and changing constituencies.

Hall v. United States

On Friday, the Florida Office of Financial Regulation closed Progress Bank of Florida, headquartered in Tampa, Florida, and appointed the FDIC as receiver.

On Friday, the Ohio Division of Financial Institutions closed Bramble Savings Bank, headquartered in Milford, Ohio, and appointed the FDIC as receiver for the bank. As receiver, the FDIC entered into a purchase and assumption agreement with Foundation Bank, headquartered in Cincinnati, Ohio, to assume all of the deposits of Bramble Savings Bank.

On Friday, the Oregon Department of Consumer and Business Services closed Home Valley Bank, headquartered in Cave Junction, Oregon, and appointed the FDIC as receiver for the bank.

On Friday, the New York State Banking Department closed USA Bank, headquartered in Port Chester, New York, and the FDIC was appointed receiver.