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

IN RE: REPOSITORY TECHNOLOGIES, INC

What should be the remedy when a bankruptcy court holds that a security interest is avoidable as a preferential transfer, but the value of the security interest is not readily ascertainable? The Ninth Circuit recently addressed this issue in USAA Federal Savings Bank v. Thacker (In re: Taylors), 2010 U.S. App. LEXIS 5793 (9th Cir. 2010). The Court held that, since the value of the security interest was not readily ascertainable, the only available remedy is for the bankruptcy court to return the security interest itself, not its value, to the bankruptcy estate.

On April 20, the House Committee on Financial Services held a hearing to discuss public policy issues raised by last month’s report of court-appointed bankruptcy examiner for Lehman Brothers Holdings Inc. (Lehman Brothers), Mr. Anton R. Valukas. The Committee heard testimony from the following witnesses:

Panel One:

federal court in New York has dismissed as moot an appeal filed by plaintiffs with products liability claims pending against General Motors Corp. (GM) before it was sold in bankruptcy. In re: Motors Liquidation Co., No. 09 Civ. 6818 (U.S. Dist. Ct., S.D.N.Y., decided April 13, 2010). The plaintiffs sought to overturn a bankruptcy court’s approval of the automaker’s sale “free and clear” of their existing products liability claims as well as any successor liability claims they may have against the “new” GM.

IN RE: ALTHEIMER & GRAY (April 15, 2010)

This case and its companion cases involved contentious construction disputes surrounding the interplay of the Massachusetts Mechanics' Lien Statute in the context of a bankrupt general contractor and a building owner’s claims for offset damages. In this instance, the dispute centered on the fact that a contractor’s bankruptcy filing left approximately 28 subcontractors unpaid for work they had already performed.

KEY POINTS

• A US Bankruptcy Court decision held that loans to a homebuilding company that subsequently filed for bankruptcy constituted a fraudulent transfer.

In today’s difficult economic environment, it is vital for trade vendors faced with customers’ bankruptcies to have optimal strategies for collecting invoices for past shipments and protecting prior payments from being clawed back by a bankruptcy estate as preferences. The need for such strategies will only increase as record amounts of corporate debt mature. Nelson D. Schwartz, Corporate Debt Coming Due May Squeeze Credit, N.Y.

A recent Delaware bankruptcy court decision1 on the ability of “bankruptcy remote” single-purpose entities emphasizes the complicated nature of the bankruptcy process and the issues that need to be considered when using “bankruptcy remote” entities in funding structures. Given the prevalence of such entities, this is an important decision for all participants in the structured fi nance industry.