Prepayment provisions are intended, in part, to protect lenders in a depressed market from losses resulting from the costs of replacing their loans sooner than expected and having to relend at rates lower than those originally charged. A New York federal district court recently upheld a bankruptcy judge's ruling denying a lender's claim for a $7.5 million prepayment premium against a borrower-debtor.1 The lender must have been both surprised and disappointed to learn from the courts' decisions that this result could have been avoided had the lender's loan documents included
Although 2011 saw major decisions concerning many facets of bankruptcy law, perhaps no area of bankruptcy law drew as many high-profile decisions as the standards for confirming a chapter 11 plan of reorganization. We draw your attention to three particularly important 2011 decisions that are likely to heavily influence the contours of many future chapter 11 plans.
Designating Votes Not Cast in Good Faith
On December 1, 2011, critical changes to the Federal Rules of Bankruptcy Procedure took effect. Among the changes, which impact all creditors, are amendments altering the information required on a proof of claim filed in a bankruptcy court. Bankruptcy Rule 3001 was substantially changed to require, among other information: (i) an itemized statement of the amount of interest, fees, expenses or other charges incurred before the bankruptcy petition was filed, if a claim includes the aforementioned fees and expenses; (ii) a statement of the amount necessary to cure any default as of
Introduction
On February 10th, electricity operator LSP Energy LP ("LSP") filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. As stated in court filings, LSP owns and operates an electricity plant located in Batesville, Mississippi. Aside from its gas-fired electric generation facility, LSP's assets consist primarily of 58 acres of land in which it operates its facility. See Declaration of LSP's President in Support of First Day Motions (the "Declaration" or "Decl.").
USDC S.D. California, February 10, 2012
The healthcare industry was ailing in 2011. There were 88 publicly traded companies that filed for Chapter 11 relief in 2011, and of that amount, approximately 11 companies were in the healthcare industry. The healthcare industry led the group, with telecommunications and energy tied for second place (nine filings in each industry). The healthcare industry has faced many challenges over the years. For starters, hospitals are not always paid for their services.
On February 10, 2012, Judge Sean H. Lane of the U.S. Bankruptcy Court for the Southern District of New York issued a ruling in a Chapter 15 bankruptcy proceeding where The Containership Company (TCC) is the debtor. Numerous shippers in the proceeding requested that the Bankruptcy Court defer to the Federal Maritime Commission with respect to the shippers' claims that TCC violated the Shipping Act of 1984.
In an earlier discussion on preference claims, we highlighted an increasingly common form of litigation in the bankruptcy courts that arises out of commercial bankruptcies: the preference action. We examined the policy underlying preference actions and the elements that give rise to a prima facie preference claim. We will now discuss some potential defenses to a preference claim and how a trade creditor can prepare itself to respond to a preference claim.
Turnaround Management Association
The United States is about to enter year five of what has been aptly deemed “The Great Recession.” Bankruptcy advising is a cyclical business, and after a dearth of work in the heady financial years of the mid-2000s, expectations were high that in the downturn bankruptcy work would be abundant and steady.