Fifth Circuit Rejects Breach of Fiduciary Duty and Fraudulent Transfer Claims
By Michael L. Cook*
Recently, the Eighth Circuit Court of Appeals issued a ruling that overdraft payments advanced by Banks which are later repaid by their customer constitute preferential transfers under the Bankruptcy Code. In re Agriprocessors, Inc., involved a meat packing company which periodically overdrew its bank accounts, and the bank issued provisional credit to cover the overdrafts. The bank initially denominated those overdrafts as “intraday” overdrafts until the midnight settlement deadline, at which point they became “true” overdrafts.
On March 20, the CFPB released updated FAQs to support the implementation of the 2016 Mortgage Servicing Final Rule. Specifically, the updated FAQs pertain to the mortgage-servicing provisions regarding bankruptcy, which are effective April 19. The CFPB released ten bankruptcy-related question and answers.
On March 20, Florida Governor Rick Scott signed Senate Bill 220 into law. The bill is designed to limit the ability of defendants in foreclosure proceedings to keep contesting the foreclosure after agreeing, in bankruptcy, to surrender the property to their lenders.
Can a bankruptcy trustee recover a fraudulent transfer made six, eight, ten years ago? Bankruptcy courts around the country are answering that question with a resounding “yes”, so long as the IRS holds an unsecured claim against the debtor. If more courts arrive at this conclusion, creditors face the risk that trustees will step into the shoes of the IRS to borrow its ten-year statute of limitations for the recovery of fraudulent transfers.
What happens to the a licensee’s right to use a trademark if the licensor files for bankruptcy?
Fraudulent conveyance litigation arising from failed leveraged buyout transactions is frequently pursued in bankruptcy proceedings as the sole source of recovery for creditors. Targets of these actions typically include those parties who received the proceeds generated by the LBO, including the debtor’s former shareholders.
Claire’s Stores, Inc., along with seven affiliates and subsidiaries, has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Lead Case No. 18-10584). Claire’s, a well-known specialty retailer of jewelry, accessories and beauty products for young women and adolescents, is based in Cook County, Illinois.
Augustus Energy Resources, LLC, a privately owned, natural gas exploration, development and production company headquartered in Billings, Montana, has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Case No. 18-10580). Augustus’ Petition estimates both its assets and liabilities to be between $10–$50 million.