The composition of the Top 10 List of public bankruptcy filings for 2014 indicates that the U.S. has largely left behind the fraud, excess, abuse, and improvidence that dominated the bankruptcy landscape during the 2007–08 financial crisis and the ensuing Great Recession. Continuing a trend that began in 2012, only a single representative from the banking and financial services industry made the cut.
For the past several years, low interest rates and higher commodity prices have resulted in generally favorable financial conditions in the energy sector, keeping energy bankruptcy activity to a minimum. With the recent sharp decline of prices in numerous commodities and forecasts of higher interest rates in the near future, there is a likelihood that the financial condition of some companies in the energy and commodities sectors could deteriorate significantly.
Despite lower-than-average Chapter 11 activity in 2014, the legal landscape for distressed investors has continued to evolve, with significant legal developments in credit bidding, make-whole premiums and intercreditor agreements. By staying apprised of the evolving jurisprudence in these areas, distressed investors can mitigate risks that have foiled lenders in recent cases.
Credit Bidding
The Bankruptcy Code authorizes a bankruptcy trustee to avoid (i.e., obtain the return of) certain types of prepetition property transfers so that the bankrupt estate can be divided among creditors fairly. For example, a trustee may bring actions to set aside transfers made within a specified period before the bankruptcy (preferences) and transfers made deliberately to defraud creditors (fraudulent transfers).
Association assessment collection is every day business for Florida community associations. Often times, the unit owner will file bankruptcy to avoid this legal obligations. The law governing condominium and homeowners association assessments with regard to bankruptcy actions is found at 11 USC § 523 (a)(16). This law which generally states that assessments are not dischargeable.
Last week’s Supreme Court arguments on bankruptcy jurisdiction in Wellness Int’l Network Ltd. v. Sharif, No. 13-935 (S.Ct.), are enough to strike fear into the heart of any bankruptcy buff. What emerges from the transcript of the oral arguments is, in a word, confusion. This bodes ill for an early resolution of the upheaval created by the Supreme Court’s decision in Stern v. Marshall, ___ U.S. ___, 131 S.Ct. 2594 (2011), limiting the power of bankruptcy judges to decide certain matters that arise in bankruptcy proceedings.
In its opinion in LTF Real Estate Company, INc. v. Expert South Tulsa, LLC (In re Expert South Tulsa), 2014 WL 6845675 (10thCir.
Today’s blog article, which looks at the treatment of specific oil and gas property interests in the bankruptcy context, is the second in the Weil Bankruptcy Blog series, “Drilling Down,” where we review issues at the intersection of the oil and gas industry and bankruptcy law.
In the United States Bankruptcy Court for the District of Delaware, the bankruptcy court dismissed a chapter 11 case for bad faith, relying in part on an email sent by someone other than the debtor relaying to his employees and sales representatives his conversation with the debtor’s chief executive officer. This decision serves as a reminder to debtor lawyers how imperative it is to review with your client what it is saying both privately and publicly about its bankruptcy case. Because even in bankruptcy court, anything you say can and will be used against you.