On September 17, 2009, the U.S.

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.  

AUTOMOTIVE  

Holley Performance Products Holdings Inc., a supplier of parts for race cars, filed its second bankruptcy petition in less than two years Monday.  

CREDIT CARDS

The United States Bankruptcy Court for the Southern District of New York entered an order on Sept. 17, 2009, granting a motion filed by Lehman Brothers Special Financing Inc. (“LBSF”) to compel Metavante Corporation (“Metavante”) to continue to make payments to LBSF under an ISDA Master Agreement.

In a significant decision recently handed down in the Lehman bankruptcy case, the United States Bankruptcy Court for the Southern District of New York held that a non-defaulting counterparty acted improperly by suspending payments under an open derivative contract with Lehman Brothers Special Financing Inc. ("LBSF").

In our update of October 20, 2008, we reported on whether "negative equity" can be part of a purchase money security interest. (http://www.masudafunai.com/showarticle.aspx?Show=3093) "Negative equity" is the excess of the amount owed on a trade-in item over the market value of the item.

latest Distressed Assets Opportunities lists prepared by our colleagues in the Business Reorganization and Bankruptcy Group and the Real Estate Group. The lists can be accessed by clicking the hyperlinks.

The court has set November 30, 2009 at 5:00 p.m. (Eastern Time) as the deadline for all creditors to file a Proof of Claim for pre-petition amounts which may be due from the debtors to creditors including those associated with open invoices entitled to priority treatment under the Bankruptcy Code for deliveries in the 20-day period immediately preceding the bankruptcy filing and the post-petition termination/rejection of executory contracts.

On September 15, 2009, the United States Bankruptcy Court of the Southern District of New York ordered Metavante Corporation (“Metavante”) to make payments to Lehman Brothers Special Financing Inc. (“LBSF”) under a prepetition interest rate swap agreement guaranteed by Lehman Brothers Holdings Inc. (“LBHI” and, together with LBSF, “Lehman”) after Metavante had suspended ordinary course settlement payments under the swap.1 Metavante claimed a contractual right to withhold payment under Section 2(a)(iii) of the 1992 ISDA Master Agreement as a result of Lehman’s bankruptcy.

The Bankruptcy Abuse and Consumer Protection Act of 2005 (BAPCPA) purported to eliminate the ability of chapter 11 debtors in possession to pay bonuses to management through Key Employee Retention Plans. However, in recognition of the fact that a real need often exists to incentivize key employees to remain with a reorganizing or liquidating business, bankruptcy courts have approved incentive plans providing for payments to insiders and other employees. Such plans must be carefully crafted to avoid the restrictions on retention bonuses post-BAPCPA.

Introduction

The dearth of credit available for companies in financial distress means an asset sale may be the only way to save the business and jobs. It also presents unusually attractive investment opportunities for public and private companies, private equity and hedge funds, and other investors with capital and an ability to move expeditiously.