With the increase in corporate bankruptcy filings over the past year, there have been some interesting bankruptcy court decisions that affect those of us on the front end in corporate lending. One recent case took up the question of whether a second lien is truly second -- and whether it is safe to expect that the terms of your intercreditor agreement will be enforced.

In an intercreditor agreement, the senior lender will usually require that the junior lender waive several of its rights, including

On April 1, the Federal Deposit Insurance Corporation (FDIC) closed the sale of an equity interest in a limited liability company (LLC) created to hold certain assets transferred from 19 failed bank receiverships. The purchaser of the interest in the Multibank Structured Transaction Single Family Residential 2010-1 is Roundpoint Mortgage Servicing Corporation (Roundpoint). The sale was the result of a competitive auction held on February 24.

Friday, the Office of the Comptroller of the Currency closed Amcore Bank, National Association, headquartered in Rockford, Illinois, and the FDIC was appointed receiver.

Friday, the Illinois Department of Financial and Professional Regulation, Division of Banking closed Peotone Bank and Trust Company, headquartered in Peotone, Illinois, and the FDIC was appointed receiver.

Friday, the Illinois Department of Financial and Professional Regulation, Division of Banking closed Broadway Bank , headquartered in Chicago, Illinois, and New Century Bank, headquartered in Chicago, Illinois, and the FDIC was appointed receiver for both banks.

Friday, the Illinois Department of Financial and Professional Regulation, Division of Banking closed Citizens Bank&Trust Company of Chicago, headquartered in Chicago, Illinois, and the FDIC was appointed receiver.

The recession has highlighted a new risk for borrowers – the risk that a lender will be insolvent and default on its obligation to fund loans under the credit agreement. This has created unexpected issues under credit agreements, which were written at a time when lender insolvency was not a perceived risk.”34

The United States District Court for the District of Connecticut, applying Connecticut law, has held that coverage under a bankers professional liability policy was precluded by the policy's insolvency exclusion where the underlying claims "arose out of" the bankruptcy of a third-party securities broker or dealer. Associated Community Bancorp, Inc. v. The Travelers Cos., 2010 WL 1416842 (D. Conn. Apr. 8, 2010). The court also held that coverage was barred by the professional services exclusion of the management liability coverage part of the policy.

Yesterday, Senate Republicans circulated a brief summary of the Financial Regulatory Improvement and Taxpayer Protection Act, a Republican substitute to the Restoring American Financial Stability Act of 2010 (S.3217) previously

The Third Circuit Court of Appeals dealt a blow to secured creditors in its recent decision holding that a debtor may prohibit a lender from credit bidding on its collateral in connection with a sale of assets under a plan of reorganization. In the case of In re Philadelphia Newspapers, LLC, No. 09-4266 (3d Cir. Mar. 22, 2010), the court, in a 2-1 decision, determined that a plan that provides secured lenders with the “indubitable equivalent” of their secured interest in an asset is not required to permit credit bidding when that asset is sold.