Introduction
This article addresses bankruptcy issues commonly arising in connection with intercreditor agreements, and is intended to provide a general examination of provisions that relate specifically to bankruptcy or other insolvency proceedings. By reviewing variations of these provisions that have appeared in negotiated second lien financings, the discussion provides a checklist that will be useful at the front end of deals of this kind.
On May 14, 2009, Judge Allan Gropper of the US Bankruptcy Court, Southern District of New York, approved a US$400 million DIP financing package in the US$27 billion General Growth Properties, Inc. (“GGP”) Chapter 11 case. Judge Gropper’s ruling also included approval of GGP’s proposal to use cash flow generated by shopping centers, structured by GGP as bankruptcy remote, special purpose entities, to fund GGP’s ongoing central operations while in bankruptcy.
Under Section 1031 of the Internal Revenue Code, a taxpayer does not recognize gain or loss on the exchange of like-kind property. Before 1984, the Code did not specifically address so-called deferred exchanges - exchanges in which the taxpayer relinquished property and some time later received the replacement property - although at least one leading case did. The 1984 rules require that the taxpayer identify the replacement property within 45 days after the disposition and close on the replacement property and close within 180 days after the disposition.
Visteon and Affiliates File for Bankruptcy Protection
Visteon Corporation and related affiliates (“Visteon”) filed voluntary bankruptcy petitions on May 28, 2009, in the United States Bankruptcy Court for the District of Delaware (“Bankruptcy Court”). Visteon intends to continue to operate its businesses while in bankruptcy. Although Visteon UK, Ltd., has already filed bankruptcy in Great Britain, it appears that Visteon’s other non-U.S. subsidiaries will not be filing separate proceedings and will not be part of Visteon’s U.S. bankruptcy proceeding.
This morning, General Motors Corp. (GM) announced in a Form 8-K filing that the U.S. Treasury Department has proposed details of a reorganization plan to GM in the event that GM seeks bankruptcy protection and bankruptcy court approval for the sale of substantially all of its assets to a newly organized company (New GM) pursuant to Section 363 of the Bankruptcy Code (363 Sale). Following the proposed 363 Sale, the U.S.
Reinhardt v. Vanderbilt Mortgage and Finance Inc. (In re Reinhardt)
563 F.3d 558 (6th Cir. Ohio 2009)
Metropolitan Insurance Company has joined ING Clarion Capital Loan Services, Inc., Wells Fargo Bank, N.A., and FRM Funding Company, Inc in requesting the Bankruptcy Court to dismiss as bad faith filings the bankruptcy cases of twenty-one property level CMBS borrower subsidiaries of General Growth Properties, Inc. ING filed the first motion on May 4th with respect to eight debtors, and a hearing was set for May 27th. That hearing was subsequently adjourned to June 17th. Creditors having similar motions to be heard on June 17th were required to file their motions to dismiss by May 29th .
In an unpublished summary order applying New York law, the United States Court of Appeals for the Second Circuit has affirmed a district court's judgment finding that many of the factual allegations asserted in a complaint against the directors and officers of the bankrupt policyholder were excluded by a prior litigation exclusion, even though some of the excluded losses accrued during time periods not at issue in the prior litigation. Pereira v. Gulf Ins. Co., 2009 WL 1262954 (2d Cir. May 6, 2009).
As the federal government and private markets make progress to quell economic recession and stimulate the engines of financial growth, recent headlines from the commercial real estate industry have focused on certain developments, such as the proposed changes in rating agency methodologies and the repeated false starts with the government’s TALF and PPIP programs.