Following the failure of over 400 financial institutions since the beginning of 2008, the FDIC has clarified its expectations with respect to collection and retention of bank documents by directors and officers of troubled or failing financial institutions for the purpose of explaining or defending their conduct.
Recent court decisions in the state of Michigan—Wells Fargo Bank, NA v. Cherryland Mall, ____ N.W.2d _____, 2011 WL 6785393 (Mich.App. 2011) (Cherryland) in the Michigan intermediate appellate court and 51382 Gratiot Avenue Holdings Inc. v. Chesterfield Development Company, 2011 U.S. Dist. LEXIS 142404 (E.D. Mi. Dec.
The New Jersey Appellate Division recently ruled in Vollers Excavating and Construction, Inc. v. Citizens Bank of Pennsylvania, Docket No.
As seen in the Spring 2012 issue of West Virginia Banker.
In the wake of the national attention directed towards residential mortgages in the last few years, certain revisions were made to the Federal Rules of Bankruptcy Procedure to address perceived deficiencies in bankruptcy proofs of claim. The rule changes were first proposed in 2009 by the Judicial Conference of the United States and became effective December 1, 2011.
Relying on the U.S. Supreme Court’s decision inAT&T Mobility LLC v. Concepcion, the Ninth Circuit Court of Appeals recently held that California’s rule against compulsory arbitration of claims for public injunctive relief was preempted by the Federal Arbitration Act (“FAA”). The Court also underscored the key points of an enforceable arbitration clause. Kilgore v. KeyBank (March 7, 2012).
Case Background
Yes, on the facts in the Chapter 11 proceedings involving Borders, the insolvent bookseller.
Jefferies & Company, an investment bank, was retained by Borders to pursue reorganisation strategies, including a possible sale of the company’s assets as a going concern. The bank made considerable efforts in flogging the assets, which resulted in an offer from an interested party, but an actual sale of assets did not happen. Jefferies nevertheless claimed the liquidation fee under its agreement with Borders. The company’s creditors opposed this: no sale, no success fee.
A proposed bill entitled the Nonrecourse Mortgage Loan Act and recently introduced to the Senate for the State of Michigan would regulate the use and enforceability of certain loan covenants in non-recourse commercial transactions. Presumably, the bill, Senate Bill No. 992 introduced on Feb. 29, 2012 and referred to the Committee on Economic Development, is in reaction to a recent decision of the Michigan Court of Appeals finding a guarantor liable for a deficiency claim notwithstanding the non-recourse nature of the loan. See Wells Fargo Bank, NA v. Cherryland Mall Ltd.
In a recent Michigan Court of Appeals case, Wells Fargo Bank N.A. vs. Cherryland Mall Limited Partnership et al., (2011 WL 6795393), the court found that the borrower’s violation of a solvency covenant triggered the conversion of the borrower’s and guarantor’s non-recourse obligations to full- recourse obligations. In light of the decision, when negotiating a non-recourse loan, parties would be well advised to pay close attention to the recourse covenants and to be very clear about which covenants, if breached, would trigger full recourse.
Background
This discussion is being provided to our clients and friends to analyze the challenges presented in this difficult economic environment when an FDICinsured institution experiences a capital difficulty and is directed by the Banking Regulators1 to restore the institution's capital adequacy.2 In the past four years, the FDIC has closed approximately 400 insured institutions—as of January 1, 2012, the FDIC has indicated that there were over 800 banks on its "problem bank list." The difficulties experienced by many of these institutions are summarized in this analysis—
Health care lenders and others evaluating or relying on the financial strength of a healthcare provider need to think about the potential recoupment and setoff of claims against Medicare/Medicaid receivables of the provider.
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