Recently, the United States Bankruptcy Court for the District of Delaware held that a carve-out provision in a DIP financing order did not act as an absolute limit on the fees and expenses payable to the professionals retained by an unsecured creditors’ committee (the “Committee”). Rather, in In re Molycorp, Inc., 562 B.R. 67 (Bankr. D. Del.

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Lender's Security Interest in Funds Lost Upon Transfer to Debtor's Counsel

In In re NewPage Corporation, et al., Adversary Proceeding No. 13-52429 (Bankr. D. Del. Feb. 13, 2017), a Delaware Bankruptcy Court applied a unique defense to certain preferential transfers targeted by a liquidating trustee. The defense focuses on a commonly overlooked element of a preferential transfer, section 547(b)(5).

Preference 101

A deposit into a checking or savings account seems like a pretty straightforward and innocuous transaction–unless the customer files for bankruptcy, and the bankruptcy trustee starts looking for assets to recover. Bankruptcy trustees will seek to recover money that once belonged to the borrower under various theories including fraudulent conveyance, particularly if the debtor-bank customer was running some sort of Ponzi or investment fraud scheme.

The United States Bankruptcy Court for the Eastern District of Michigan recently allowed a debtor to modify his confirmed Chapter 13 plan based upon a mistake by the debtor’s counsel. The result of the modification was to reduce the plan to 36 months from 60 and reduce the repayment to unsecured creditors by 80 percent.

A copy of In re Luman is available at: Link to Opinion.

State and federal laws provide numerous protections to secured parties to preserve their interests in collateral. As secured parties well know, however, these protections become more and more limited when the collateral is pledged to multiple secured parties. Issues, like priority of interests and liens, become more prevalent when the collateral at issue falls in value and multiple secured parties are fighting to enforce their interests in order to satisfy their debts.

State and federal laws provide numerous protections to secured parties to preserve their interests in collateral.  As secured parties well know, however, these protections become more and more limited when the collateral is pledged to multiple secured parties.  Issues, like priority of interests and liens, become more prevalent when the collateral at issue falls in value and multiple secured parties are fighting to enforce their interests in order to satisfy their debts.

(Bankr. S.D. Ind. Feb. 10, 2017)

The bankruptcy court enters judgment in favor of the debtor on the trustee’s claims to avoid transfers of real property, but the court enters judgment in favor of the trustee on the claim under 11 U.S.C. § 727(a)(4) and denies the debtor a discharge. The court finds that the debtor made a false oath on his statement of financial affairs with reckless disregard for the truth. The debtor had transferred property prior to his divorce but claimed those transfers were made as a result of the divorce. Opinion below.

Judge: Moberly

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