California’s AB 506 process was intended to help a municipality in restructuring its debt obligations and avoid bankruptcy. However, the lessons of the bankruptcies of the City of Stockton, the Town of Mammoth Lakes and the City of San Bernardino support the reality that a meaningful restructure requires material involvement by the major stakeholders. California’s recent wave of municipal bankruptcies tend to show that the AB 506 process has not changed this reality, but rather made a difficult process longer and more arduous.
A recent decision by the Second Circuit underscores the importance to debt collectors of accurately describing the options available to a student loan borrower in bankruptcy, even a borrower who previously filed but did not seek the determination of undue hardship that would have been a necessary predicate to any discharge.
On August 29, 2012, Contec Holdings, Ltd ("Contec") and various related entities filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. Simultaneous with filing its bankruptcy petitions, Contec also filed with the Bankruptcy Court a declaration of the company's Chief Restructuring Officer in support of its first day motions (the "Declaration"). Contec was started in 1978 and provides repair services for cable and broadband operators. The company services equipment such as cable set-tops, modems and satellite receivers.
On September 11, 2012, Digital Domain Media Group and various related entities (collectively, "Digital Domain") filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. Digital Domain filed several "first day" pleadings with the Bankruptcy Court, one of which is the Declaration of Digital Domain's Chief Restructuring Officer in Support of First Day Motions (the "Declaration"). As set forth in the Declaration, Digital Domain provi
In the case of In re Santa Ysabel Resort and Casino, the Bankruptcy Court for the Southern District of California heard arguments on September 4, 2012, as to whether the alleged debtor, a tribal casino, was eligible for bankruptcy protection. The court concluded the casino was not an eligible debtor under the Bankruptcy Code.
The Second Circuit Court of Appeals recently heard arguments in a case that could have substantial implications on the trading of bankruptcy claims. While the court could choose to resolve the case, Longacre Master Fund, Ltd. v.
Introduction
Favorable contracts are an important asset for a bankruptcy estate. If a contract is an executory contract (a contract with performance remaining by both parties), the Bankruptcy Code gives a debtor the choice of either assuming and performing under the contract going forward, or rejecting the contract and leaving the resulting rejection damages as a claim against the bankruptcy estate. Similarly, a debtor may choose to perform or not perform under a nonexecutory contract for which it has continuing obligations.
In the first decision, the U.S. Court of Appeals for the Sixth Circuit affirmed the district court decision, concluding that a defendant’s bankruptcy filing does not prevent the district court from ruling on a contempt motion for violation of a temporary restraining order protecting plaintiff’s trademarks. Dominic’s Restaurant of Dayton, Inc. v. Mantia, Case Nos. 10-3376; -3377 (6th Circuit July 5, 2012) (Batchelder, C.J.; McKeague, J.; Quist, D.J., sitting by designation).