The Sixth Circuit recently held that section 2-702(3) of the Uniform Commercial Code (the "UCC"), which permits good faith purchasers to defeat a valid right to reclaim, does not allow a secured creditor to defeat that right.[1] The Sixth Circuit found that the security interest held by a DIP lender could not be used to defeat the right of a reclaiming creditor under the UCC or pre-BAPCPA section 546(c) of the Bankruptcy Code. This decision may impact the way bankruptcy courts consider reclamation claims under revised section 546(c) of the Bankruptcy Code.

Yesterday, the House Judiciary Committee held a hearing to discuss two proposed bills, H.R. 200, the “Helping Families Save Their Homes in Bankruptcy Act of 2009” and H.R. 225, the “Emergency Homeownership and Equity Protection Act", that would allow bankruptcy judges to modify the terms of certain mortgages on principal homes during bankruptcy proceedings. H.R.

The following is a list of some recent larger U.S. bankruptcy filings in various industries. To the extent you are a creditor to any of these debtors, or other entities which may have filed for bankruptcy protection, you as a creditor are entitled to certain protections under the Bankruptcy Code.  

AMUSEMENT PARKS

HRP Myrtle Beach Holdings converts to Chapter 7; unable to find post-petition financing.  

BANKING

Silver State Bancorp files Chapter 7 petition in Nevada.  

Introduction

Introduction:  

Investors victimized by the fraud perpetrated by Bernard Madoff and his company, Bernard L. Madoff Investment Securities, LLC (collectively Madoff), should be aware of their legal options and risks. Some of these options have very short deadlines. Likewise, investors who successfully withdrew their investments before Madoff`s fraud came to light could face potential claims. In either circumstance, the prospects of litigation are high.

As the economy worsens and the value of corporate assets declines, unsecured creditors are finding that very little, if anything, is left for them at the bankruptcy table after the secured creditors have taken as much as they can from a debtor’s assets. Now, after a period of having copious credit available on attractive terms, debtors are going into bankruptcy without sufficient assets to pay even their secured creditors in full. In such circumstances, prospects for unsecured creditors are bleak indeed.  

The U.S. Court of Appeals for the Fourth Circuit recently issued an opinion, reversing an earlier bankruptcy court ruling that had revived the question of whether a physical supply contract may qualify as a forward contract or swap agreement for purposes of the Bankruptcy Code. Previously, the bankruptcy court for the Eastern District of North Carolina ruled that what it termed a simple supply contract between a natural gas seller and an end-user, as a matter of law, does not constitute a swap agreement.

The U.S. Court of Appeals for the Third Circuit held on Feb. 3, 2009, that a debtor’s “strategic partnership” vendor was liable as a non-statutory insider for preferential payments it received approximately four months prior to the debtor’s bankruptcy. In re Winstar Communications, Inc., ___F.3d ___, 2009 U.S. App. LEXIS 1953, at *1 (3d Cir. 2/3/09). The court affirmed the bankruptcy court’s judgment (an 88-page decision with detailed fact findings), rendered after a 21-day bench trial that included 1,400 exhibits and 39 witnesses.

On December 10, 2008, Bernard Madoff confessed to his two sons that he had been running what amounted to a massive Ponzi scheme on the scale of approximately $50 billion and that he could no longer sustain it due to, among other things, substantial redemption requests. That night, his sons alerted authorities.