On January 16, 2019, Gymboree Group, Inc. and 10 affiliated debtors (collectively, “Debtors” or “Gymboree”) filed chapter 11 in the United States Bankruptcy Court for the Eastern District of Virginia (Richmond Division). On January 17, 2019, Gymboree, Inc. commenced a parallel proceeding in Canada under subsection 50.4(a) of the Bankruptcy and Insolvency Act (Canada).

In In re Argon Credit, LLC, et al., Case No. 16-39654 (Bankr. N.D. Ill. Jan. 10, 2019), the United States Bankruptcy Court for the Northern District of Illinois recently held that a standby clause in a subordination agreement prevented a subordinated lender from conducting discovery on the senior lender’s claim, pursuant to section 510 of the Bankruptcy Code.

The Supreme Court of Ohio recently held that a mortgagee may enforce a mortgage against a mortgagor who signed, initialed, and acknowledged the mortgage even though the body of the mortgage agreement does not identify the mortgagor by name.

In so ruling, the Supreme Court of Ohio allowed a mortgagee to use parole evidence to determine the mortgage signatory’s intent where there is an ambiguity.

The U.S. Court of Appeals for the Eleventh Circuit recently held that a mortgage loan with a post-plan maturity date was not discharged in a Chapter 13 bankruptcy because the plan did not “provide for” the debt and modify the repayment terms of the mortgage.

The Eleventh Circuit also held that the debt was not discharged because discharge would violate 11 U.S.C. § 1322(b)(2)’s anti-modification provision for mortgages secured by the debtor’s principal residence.

Pursuant to 11 U.S.C. § 1322(b)(2), a Chapter 13 bankruptcy plan cannot modify the rights of a secured creditor whose claim is only secured by an “interest in real property that is the debtor’s principal residence.” On December 6, the Eleventh Circuit held that this provision prevents the discharge of a mortgage in a Chapter 13 bankruptcy, regardless of whether the plan “provided for” the mortgage or whether the mortgagee filed a proof of claim.

On November 30, 2018, Judge Nelson S. Román of the United States District Court for the Southern District of New York issued a decision affirming the dismissal of certain claims brought by senior secured creditors against junior secured creditors concerning the alleged breach of standstill and turnover provisions in an intercreditor agreement that governed the creditors’ relationship as creditors with recourse to common collateral. SeeIn re MPM Silicones, LLC, No. 15-CV-2280 (NSR), 2018 WL 6324842 (S.D.N.Y. Nov. 30, 2018) (“Momentive”).

Yesterday, the Board of Governors of the Federal Reserve System (“Board”) and the Federal Deposit Insurance Company (“FDIC”) (together, the “Agencies”) issued feedback and other guidance regarding the resolution plans (or living wills) of 12 global systemically important banks (“GSIBs”). Specifically, the Agencies finalized guidance (Final Guidance) to the eight US GSIBs regarding the firms’ resolution pl

On December 27th, Jonathan and I returned to the studio to record the latest podcast for The Bank Account. We haven’t discussed New Year’s Resolutions, but we’ll try to return to a little more normalcy in 2019!

In a decision issued on December 28, 2018, the Sixth Circuit Court of Appeals affirmed the Bankruptcy Court and the District Court, awarding chapter 11 debtor and creditors’ committee professionals their attorneys’ fees based upon a “carve-out” provision in the cash collateral order and ahead of the secured creditors, despite conversion of the case to chapter 7. East Coast Miner LLC v. Nixon Peabody LLP (In re Licking River Mining, LLC), Case No. 17-6310, 2018 US. App. LEXIS 36677 (6th Cir. 2018).

In a recent decision, In re Orexigen Therapeutics, Inc., No. 18-10518 (KG) (Bankr. D. Del. Nov. 13, 2018), Judge Kevin Gross of the United States Bankruptcy Court for the District of Delaware held that the mutuality requirement of section 553 of the Bankruptcy Code must be strictly construed, declining to find mutuality in a triangular setoff between the debtor, a parent entity that owed the debtor money, and that entity’s subsidiary, which was a creditor.