The U.S. Bankruptcy Court for the District of Delaware recently issued a decision addressing triangular set-off provisions, which potentially has very far-reaching implications for the enforceability of contractual set-off rights under U.S. law.

A known creditor, which was aware of a debtor’s pending bankruptcy but did not receive legally required notice of the debtor’s chapter 11 case, was not barred from bringing a state action following bankruptcy discharge.

The U.S. Court of Appeals for the First Circuit held that actual knowledge of the pending chapter 11 case did not satisfy due process requirements; therefore, the known creditor’s subsequent claim was not barred by the debtor’s discharge injunction. Arch Wireless, Inc. v. Nationwide Paging, Inc. (In re Arch Wireless, Inc.), 534 F.3d 76 (1st Cir. 2008).

A bankruptcy filing by a property owner may not be the only action that prevents foreclosure of a security interest in that property held by a secured creditor. In a growing list of cases, courts also have held the bankruptcy of a junior secured creditor with a lien on the property invokes the automatic stay against such action.

Yesterday, in a bankruptcy court hearing held for Chrysler LLC (and 24 of its wholly owned subsidiaries), which filed for Chapter 11 bankruptcy protection last Thursday, U.S.

Today, the House Financial Services Committee, chaired by Representative Barney Frank (D-MA), held a hearing on the effects of the Lehman Brothers bankruptcy on state and local governments and other publicly-funded entities.

Testifying at the hearing were the following witnesses:

Panel One:

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.  

AGRICULTURE  

Greenhouse farmer Eurofresh Inc. files Chapter 11 in Arizona.  

AUTOMOTIVE  

In light of the continuing economic downturn, many issuers with periodic reporting obligations under the Securities Exchange Act of 1934 are or may be faced with the prospect of reorganizing or liquidating under the United States Bankruptcy Code. These issuers must file their Exchange Act reports under the strain of the bankruptcy process, which imposes practical difficulties in completing and timely filing the reports during a time when resources are limited. Can these reporting requirements be modified so that issuers can more readily satisfy them?

Chrysler and Affiliates File for Bankruptcy Protection

Chrysler LLC and related affiliates (“Chrysler”) filed voluntary bankruptcy petitions on April 30, 2009, in the United States Bankruptcy Court for the Southern District of New York (“Bankruptcy Court”). Chrysler intends to continue to operate its businesses while in bankruptcy. Chrysler’s non-U.S. subsidiaries do not appear to be included in Chrysler’s U.S. bankruptcy filing and will continue to operate outside the supervision and jurisdiction of the Bankruptcy Court.

On April 8, 2009, the Second Circuit Court of Appeals issued a ruling that creates an additional hurdle for companies providing single-employer pension funds when seeking to reorganize through a bankruptcy. In general, the termination of a pension plan can give rise to a per-employee termination premium (a “Termination Premium”) owed by the company terminating the plan to the Pension Benefit Guaranty Corporation (“PBGC”), the quasi-governmental entity that insures pension plans.

In a recent decision, the Bankruptcy Court for the District of Delaware allowed the collateral agent for senior lenders to credit bid for the debtors’ assets even though all of the senior lenders had not authorized the bid. One of the senior lenders had objected to the group’s acquisition of the debtors’ assets by the credit bid. In re GWLS Holdings, Inc., 2009 WL 453110 (Bankr. D. Del. Feb. 23, 2009) (Walsh, J.).