In March 2016, the U.S. Court of Appeals for the Seventh Circuit ruled that a landlord may be liable to a debtor’s bankruptcy estate for the value of a lease the debtor terminated early, holding the termination may be an “avoidable transfer” under the Bankruptcy Code.1 The opinion in Official Comm. of Unsecured Creditors v. T.D. Invs. I, LLP (In re Great Lakes Quick Lube LP)2 reversed the Bankruptcy Court’s ruling, and in doing so perhaps expanded the definition of a “transfer” under the Bankruptcy Code.
Background
The Consumer Financial Protection Bureau (CFPB) recently reopened the comment period for its proposed amendments to the mortgage servicing related rules under RESPA and TILA that generally would require servicers to provide modified periodic statements to consumers who have filed for bankruptcy.
Does the bankruptcy filing of a limited liability company without the approval of its “Special Member,” the secured lender serving as “blocking director,” render that filing infirm as unauthorized and subject to dismissal? Not necessarily, held the United States Bankruptcy Court for the Northern District of Illinois in a
A bankruptcy court wrote that filing for bankruptcy is “powerful magic.” By finding federal preemption of state law fraudulent transfer claims, the Second Circuit Court of Appeals’ decision in the long-running Tribune case showed just how powerful this magic can be.
The issue of whether gathering agreements are subject to rejection in bankruptcy as executory contracts and whether certain provisions of those agreements run with the land and survive rejection will impact ongoing bankruptcy proceedings of producers, as well as renegotiations of existing gathering agreements.
Bankruptcy is all about the debtor’s assets, specifically how many and who gets them. The reason that many bankruptcy cases are contentious is that the parties often disagree about the amount of assets available for distribution to creditors, as well as how the assets should be divvied up.
Bankruptcies in the retail space are prevalent these days. Some of the more recent and prominent bankruptcies are Pacific Sunwear, Sports Authority, American Apparel and RadioShack. Even if you do not have a lease with a “big box” retailer, plenty of smaller retailers are in distress as well. For Landlords, what do you do if one of your tenants files Chapter 11?
Let’s start with what not to do.
For secured lenders, a consumer debtor’s chapter 13 bankruptcy filing can be a mixed bag.
In the most recent chapter of the Rosenberg involuntary bankruptcy, the Eleventh Circuit Court of Appeals has held that when a case “arising under” the Bankruptcy Code is tried by the District Court, the Federal Rules of Bankruptcy Procedure govern. Rosenberg v. DVI Receivables XIV, LLC, No. 14-14620 (11th Cir. April 8, 2016).