The Bankruptcy Code permits a bankruptcy trustee to compel return of a payment made to a creditor within 90 days before a bankruptcy petition. 11 U.S.C. § 547(b)(4)(A). The justification for compelling the return of preference payments is to level the playing field among creditors by not rewarding those who, perhaps, pressed the debtor the hardest on the eve of bankruptcy.
July Interest Rates for GRATs, Sales to Defective Grantor Trusts, Intra-Family Loans and Split Interest Charitable Trusts
Editor’s Note: On June 16, 2016, The Bankruptcy Cave gave you our summary of the controversial Sabine decision. At that time, post-hearing motions were pending.
Thomas Edison famously said that “opportunity is missed by most people because it is dressed in overalls and looks like work.” Consistent with Edison’s musings, companies in an acquisition mode often overlook opportunities that arise in the bankruptcy arena because they lack knowledge of the system and think bankruptcy is an unruly beast dressed in extra-large overalls.
In an earlier blog piece we reported on the Third Circuit’s 2015 decision in In re Jevic Holding Corp. where the Court approved a settlement, implemented through a structured dismissal, which allowed junior creditors to receive a distribution prior to senior creditors being paid in full.
Court holds that distributions made pursuant to priority payment provisions contained in CDO transactions are protected by Section 560 of the Bankruptcy Code
On June 14, 2016, Judge Thuma of the Bankruptcy Court for the District of New Mexico issued a memorandum opinion holding that a debtor could reject a prepetition settlement agreement that was determined to be executory in nature.
Reversing a bankruptcy court order in favor of the debtor, the U.S. District Court for the District of Maryland recently held that a bank that had allowed amounts to be withdrawn from a home equity credit line after the HELOC had been frozen could still recover those amounts from the debtor.
A copy of the opinion is available at: Link to Opinion.
In recent years, constructively fraudulent transfer claims asserted in bankruptcy cases, especially those arising from LBOs and similar shareholder transactions, have hit a major road block.
The U.S. Bankruptcy Court for the District of Delaware recently issued an opinion that addresses, among other issues, the question of whether section 546(e) of the Bankruptcy Code preempts certain fraudulent transfer avoidance actions brought under state law. In re Physiotherapy Holdings Inc., No. 15-51238 (Bankr. D. Del. June 20, 2016).
Businesses need to have written protocols in place to deal with bankruptcy filings by their employees and independent contractors, or they risk serious sanctions and, potentially, punitive damages for violations of the bankruptcy laws. Consider two examples.