This is the second part in a series of articles discussing certain restructuring and insolvency related provisions of the Tax Reform. Previously we discussed net operating losses (“NOLs”), and noted that the House and Senate plans are quite similar when it comes to NOLs. That is not the case with the provisions in H.R. 1 that relate to cancellation of the debt (“COD”).

Congress is attempting to pass tax reform legislation and presently the House of Representatives and the Senate have separate proposals under consideration (separately, H.R. 1 and the Senate Plan, respectively, and collectively, “Tax Reform”). The Tax Reform is changing daily, but one thing seems likely and that is that the Tax Reform will change the treatment of net operating losses (“NOLs”). These changes would have the most significant impact to bankruptcy cases filed after December 31, 2017.

If a debtor seeks to sell, pursuant to a 363 sale, real property as to which it is the landlord under an unexpired prepetition lease, can such property be sold “free and clear” of the non-debtor tenant’s leasehold interest?

Lenders rejoice. The Second Circuit recently issued its highly anticipated opinion in In re MPM Silicones, LLC, where it held that the appropriate cramdown interest rate in chapter 11 cases is the market rate (so long as an efficient market exists) rather than the formula rate applied by the US Supreme Court in individual debtors’ chapter 13 cases.

In many decisions involving US chapter 15 cases, the bankruptcy court’s principal focus will be on what is the debtor’s center of main interests (COMI). An ancillary issue is whether it is appropriate to create COMI to obtain the benefit of a more favorable jurisdiction to restructure a company’s debt (otherwise known as “COMI shifting”).

Holders of unclaimed property should take note that Illinois’ state budget bill, SB 9, enacted July 7, 2017, includes significant changes to Illinois’ unclaimed property law. Just days before it was enacted, the Illinois General Assembly amended SB 9 to include a modified version of the Uniform Law Commission’s 2016 Revised Uniform Unclaimed Property Act. Illinois’ new unclaimed property law will become effective January 1, 2018 and will repeal the state’s current unclaimed property law, the Uniform Disposition of Unclaimed Property Act.

Summary

Third Circuit holds that State-specific protections in favor of oil and gas producers did not apply under Article 9 of the UCC

In In re Lehman Brothers Holdings Inc., the U.S. Court of Appeals for the Second Circuit recently affirmed that claims filed by Lehman employees on account of restricted stock units (“RSUs”) are subject to subordination under section 510(b) of the Bankruptcy Code.

The United States Court of Appeals for the Ninth Circuit recently held in Mastan v. Salamon (In re Salamon) that an undersecured creditor with a nonrecourse claim lost the right to assert a deficiency claim under section 1111(b) of the Bankruptcy Code when a senior secured creditor foreclosed on and sold its collateral during the bankruptcy case.