Yesterday, the Depository Trust & Clearing Corporation (DTCC) announced that its Trade Information Warehouse (TIW) successfully completed on October 21st settlement of the over-the-counter credit default swaps (CDS) related to the credit event of Lehman Brothers Holdings Inc.
An oversecured creditor’s right to interest, fees, and related charges as part of its allowed secured claim in a bankruptcy case is well established in U.S. bankruptcy law.
We previously posted on March 17, 2008 about a bankruptcy judgment in favor of a reinsured, Acceptance Insurance Companies, Inc. (“Acceptance”), which sought to be excused from the payment of $9 million in premium owed to its reinsurer for the remaining term of a five year contract because it had ceased writing the underlying crop insurance which was the subject of the reinsurance contract.
In Re NVMS, LLC, Case No. 308-01901 (Bkrtcy.M.D.Tenn. Mar 21, 2008)
The debtor in this case is a medical services company who contracted with Medical Billing Partnership (“MBP”) to handle all of its billing. After filing for bankruptcy, the debtor asked MBP to provide billing data so as to determine the status of claims, but MBP refused to provide the information due to the proprietary software. MBP did provide a hard copy as well as a CD-rom with the information in an unformatted text file.
While the current outlook may be grim for the economy at large, the prospects of individual companies vary significantly, and some companies will continue to perform well despite the larger trends. For example, the designer retailer’s loss may become Walmart’s gain as consumers shop more closely for bargains. As the car manufacturers frequently say, “your mileage may vary.”
On November 13, 2008, Lehman Brothers Holdings Inc. and its U.S. affiliates in bankruptcy, including Lehman Brothers Special Financing and Lehman Brothers Commercial Paper (collectively, “Lehman”) filed a motion asking that certain expedited procedures be put in place to allow Lehman to assume, assign or terminate the thousands of executory derivative contracts to which they are a party.
On November 13, 2008, Lehman Brothers Holdings Inc. and its affiliated debtors in Chapter 11 (collectively, “Lehman”) filed a motion (the “Motion”) seeking Bankruptcy Court approval of procedures (the “Procedures”) for the assumption and assignment of derivative contracts not yet terminated by its various counterparties, as well confirmation of Lehman’s right to enter into settlement agreements for the termination of derivative contracts that have been terminated by its counterparties post-petition.
On Friday, November 14, 2008, the Executive Office for United States Trustees ("EOUST") issued for public comment a notice of proposed rulemaking setting forth procedures and criteria U.S. Trustees will use when considering applicants seeking to become approved providers of a personal financial management instructional course (the "Proposed Rule"). Comments are due by January 13, 2009.
Summary of Key Aspects of the Proposed Rule
Lehman Brothers Holdings Inc. and its affiliated debtors (collectively, the “Debtors”) filed a motion in the bankruptcy court on Nov. 13, 2008, asking the court to approve procedures for (i) assuming (affirming) and assigning derivative contracts entered into before the Debtors commenced their bankruptcy cases, including resolving cure amounts; and (ii) entering into settlement agreements that may establish termination payments and the return of collateral under terminated derivative contracts.
Debtors’ Derivative Contracts
The United States Bankruptcy Court for the Southern District of New York overseeing the Lehman Brothers (“LBI“) case under the Securities Investor Protection Act (“SIPA“) entered an order on Nov. 7, 2008 (the “Claims Bar Date Order“) establishing the following deadlines for the filing of claims against LBI: