Introduction
Earlier this month, the Liquidating Trust in the Advanta Corp. bankruptcy proceeding began filing preference complaints in the Delaware Bankruptcy Court. Advanta and certain affiliates ("Advanta") filed for bankruptcy in Delaware in November of 2009. As stated in the Liquidating Trust's complaints, Advanta was at one time one of the largest issuers of "business purpose credit cards" in the United States.
Background
Judge Buchwald of the U.S.
The Bottom Line:
Frontier Insurance, in rehabilitation, filed proofs of claim following the Chapter 11 bankruptcy of Black, Davis & Shue Agency. The claims related to captive reinsurance program with Frontier. In turn, Westport Insurance, which had issued a professional liability insurance policy to BDS, objected to Frontier’s claims, asserting affirmative defenses and counterclaims. Frontier moved to dismiss those objections, or in the alternative, for a stay pending a ruling on BDS’s own objections to Frontier’s claims.
On October 28, 2011, the United States Bankruptcy Court for the Eastern District of Virginia issued an opinion with significant ramifications for any holder of a patent license that operates internationally. At issue was an important protection afforded to patent licensees under the United States Bankruptcy Code, § 365(n), which limits a debtor's right to reject intellectual property licenses in bankruptcy and generally provides that, in the event of a rejection, the licensee may elect either to treat the license as terminated or retain its rights for the duration of the license.
On Oct. 28, 2011, the United States Bankruptcy Court for the Eastern District of Virginia issued an opinion with significant ramifications for any holder of a patent license that operates internationally. At issue was an important protection afforded to patent licensees under the United States Bankruptcy Code - § 365(n).
The first day hearings in the Chapter 11 cases of MF Global Holdings Ltd and MF Global Finance USA Inc (together the "Debtors") were held on 1 November 2011 before Judge Martin Glenn in the U.S. Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court").
The bankruptcy court in the City of Harrisburg's Chapter 9 proceeding held a hearing on Tuesday, November 1 on the Mayor’s motion for an order clarifying that the City had the ability to pay its debts in the ordinary course. The court found that given the limitation on its jurisdiction under Chapter 9 of the Bankruptcy Code and given that Bankruptcy Code Section 363 (which deals with generally with the use, sale or lease of property) is not incorporated into Chapter 9, the City does have the authority to pay its vendors in the ordinary course, including vendors with amounts owed
Rejection of a contract in bankruptcy may not always accomplish a debtor’s goal to shed ongoing contractual obligations and liabilities, especially when dealing with employee benefit plans. On October 13, 2011, the Fifth Circuit Court of Appeals highlighted this issue in its opinion in Evans v. Sterling Chemicals, Inc.1 regarding the treatment of a pre-bankruptcy asset purchase agreement which contained a provision addressing the debtor-acquiror’s post-closing ERISA retiree benefit plan obligations to its new employees resulting from the transaction.
The rapid collapse of MF Global into bankruptcy amid claims that millions of dollars in customer funds is a key focus for the SEC and CFTC as well as SIPIC this week. Speculation over the outcome of the hearings before Judge Rakoff on the SEC’s settlement with Citigroup is also a key topic in securities litigation this week.