A recent bankruptcy New York court decision1 highlights a less commonly used option for lenders to take control of troubled real estate projects. The lender obtained relief from the automatic stay to foreclose on membership interests pledged to secure its mezzanine loan instead of foreclosing on its mortgage against the underlying real property.
Here is the case, and what lenders can learn from it.
The Case
On 18 May 2010, Lehman Brothers Holdings Inc. and its associated debtors (together, the "Debtors") filed a further six omnibus objections to claims filed in their Chapter 11 proceedings with the US Bankruptcy Court (the "Objections"). The Objections contain orders prepared by the Debtors on behalf of the US Bankruptcy Court which, if granted, will enable the Debtors to disallow and expunge the claims identified in each of the Objections from the register of claims.
The United States District Court for the District of Delaware recently affirmed a Bankruptcy Court decision that invalidated the use by creditors of so-called “triangular”, or non-mutual, setoffs in which obligations are offset among not only the parties to a bilateral contract but also their affiliates. In re SemCrude, L.P., 2010 U.S. Dist. LEXIS 42477 (D. Del.
Introduction
Many landlords are very familiar with provisions of the United States Bankruptcy Code dealing with assumption and rejection of leases. However, the particular consequences of lease rejection may not be as well known. For example, once a lease is rejected or deemed to be rejected, a landlord may not know its rights with respect to regaining possession of the leased premises. A recent case from a Florida bankruptcy court shed some light on this issue when it held that after a debtor has rejected a lease, the tenant must surrender the premises to the landlord.
Introduction
On May 31, 2010, Specialty Products Holding Corp ("SPHC" or the "Debtor"), filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware. This post is one of two posts regarding the SPHC bankruptcy. The first post will look at the Debtor's businesses and events leading up to the bankruptcy filing, while a second post will look at how SPHC intends to deal with the large volume of asbestos claims that forced it to file for bankruptcy.
The Third Circuit recently held that a bankruptcy court may confirm a Chapter 11 plan that includes a sale of assets in which secured creditors are not permitted to “credit bid” for the assets. In re Philadelphia Newspapers, LLC, 599 F.3d 298 (3d Cir. 2010). In that case, the debtors in possession, companies that own and operate the Philadelphia Inquirer and Philadelphia Daily News, moved the bankruptcy court to approve bid procedures for an auction of the debtors’ assets. Id. at 302.
Introduction
Recently, the LandSource Creditor Litigation Liquidating Trust (the "Litigation Trust"), commenced various avoidance actions in the United States Bankruptcy Court for the District of Delaware. This post will look briefly at the events leading to the commencement of this bankruptcy proceeding. Further, the post will look at some of the issues that confronted the Debtor during the reorganization process.
Background
INTRODUCTION