On May 23, 2014, the Federal Trade Commission announced that the FTC’s Bureau of Consumer Protection sent a letter to the court overseeing the bankruptcy proceedings for ConnectEDU Inc. (“ConnectEDU”), an education technology company, warning that the proposed sale of the company’s assets raises privacy concerns.

Law360, New York (May 27, 2014, 4:11 PM ET) -- The Perishable Agricultural Commodities Act has many ramifications for secured lenders who provide financing to borrowers that own goods that fall within its scope, particularly in bankruptcy. Because PACA provides its beneficiaries — unpaid suppliers and sellers of perishable agricultural commodities and products — with superior rights over other creditors through the establishment of a trust, secured lenders must be careful not to rely on the standard language in bankruptcy orders that cleanse assets of liens.

Recent Developments in Bankruptcy and Restructuring
Volume 13 l No. 3 l May–June 2014 JONES DAY
Business
Restructuring
Review
Eighth Circuit Expands Subsequent New Value
Preference Defense in Cases Involving Three-Party
Relationships
Charles M Oellermann and Mark G. Douglas
A bankruptcy trustee or chapter 11 debtor-in-possession has the power under section
547 of the Bankruptcy Code to avoid a transfer made immediately prior to
bankruptcy if the transfer unfairly prefers one or more creditors over the rest of

A trustee has filed a motion requesting court approval of a bankruptcy plan that would require New England Compounding Pharmacy owners and executives to establish a $100-million settlement fund for the benefit of creditors and individuals allegedly harmed by a 2012 fungal meningitis outbreak linked to the company’s steroid injections. In re New Eng. Compounding Pharm., Inc., No. 12-19882 (Bankr. D. Mass., motion filed May 6, 2014).

The Bankruptcy Code impairs lenders’ rights in various ways.  Accordingly, lenders have long attempted to devise methods of preventing borrowers from filing for bankruptcy protection.  Such attempts generally have not been successful -- courts hold that as a general matter, a borrower’s pre bankruptcy waiver of the right to file bankruptcy is against public policy and is void.  See, e.g., Klingman v. Levinson,831 F.2d 1292, 1296 n.3 (7th Cir.

Over the years, clients have sought my advice after they have obtained a judgment against a limited liability company or a corporation, and after they have tried, without success, to collect on that judgment.  All of the typical judgment enforcement methods have already failed.  Because judgment debtors generally do not volunteer payment and sometimes will take steps to make it much more difficult for a creditor to collect, this scenario is somewhat common.  In response, clients will ask what they can do.  There are a number of options.  These include putting the ju

As the economy continues to emerge from the global recession in the late 2000s, one of the prevailing trends we have seen is the continuation of challenges to distressed investors that have employed a “loan-to-own” strategy. Boiled to its basics, the loan to own strategy is a method of investing by a distressed investor — frequently a private equity or hedge fund — that acquires the secured debt of a borrower at a discount (often deep) with the hope of either being paid at par or using the par value of the secured debt to acquire the company.

On April 29, 2014, Energy Future Holdings filed what it claims is a pre-packaged chapter 11 bankruptcy in Delaware. The bankruptcy, which ranks among the largest cases ever with over $36 billion in assets and nearly $50 billion in debt, is the product of an agreement with senior bondholders on the terms of a debt-for-equity swap.

Three months ago, the U.S. District Court in Delaware upheld the bankruptcy court’s decision in In re Fisker Auto. Holdings, Inc., which limited, for “cause,” the amount that the purchaser of a secured lender’s claim could credit bid in connection with an asset sale under section 363 of the Bankruptcy Code.

Finds Bankruptcy Court to be Proper Forum for Claim Objection Despite Forum Selection Clauses in Investor Agreements

The Southern District of New York recently reiterated the critical difference between creditor claims and equity interests in the bankruptcy context.  In a recent opinion arising out of the Arcapita Bank bankruptcy case, the Court was faced with an objection to a proof of claim filed by an investor, Captain Hani Alsohaibi, who characterized his right to recovery against the debtors as being based on a “corporate investment.”