COSTELLO v. GRUNDON (October 18, 2010)

3V Capital Master Fund LTD. v. Official Comm. of Unsecured Creditors of TOUSA, Inc. (In re TOUSA, Inc.), 2011 U.S. Dist. LEXIS 14019 (S.D. Fla. Feb. 11, 2011).

Industry observers have been waiting to see when bank failures arising out of the recent financial crisis would produce a wave of Federal Deposit Insurance Corporation (“FDIC”) litigation similar to that seen in the early 1990s after the savings and loan crisis. With its second suit in recent months, the FDIC has shown that it will aggressively pursue claims against directors and officers in connection with failed depository institutions.

In pari delicto is a common law defense against liability in circumstances where the culpability of the plaintiff is at least as great as the culpability of the defendant. The Supreme Court of Pennsylvania clarified Pennsylvania law on this on February 16, 2010, in Official Comm. Of Unsecured Creditors of Allegheny Health, Educ. & Research Found. v.

Reversing a bankruptcy court order in favor of the debtor, the U.S. District Court for the District of Maryland recently held that a bank that had allowed amounts to be withdrawn from a home equity credit line after the HELOC had been frozen could still recover those amounts from the debtor.

A copy of the opinion is available at:  Link to Opinion.

(Bankr. E.D. Ky. June 23, 2016)

The bankruptcy court applies Kentucky’s borrowing statute, KRS § 413.320, to determine the applicable statute of limitations for the debtor’s defamation, breach of contract, and fraud claims. The court analyzes where each claim accrued and dismisses some but not all of the debtor’s claims. Opinion below.

Judge: Wise

Attorney for Debtor: Dann Law Firm, Brian D. Flick

Attorney for Defendants: Christopher M. Hill, John R. Wirthlin, Frost Brown Todd LLC, Patricia K. Burgess, Stephanie Smiley

Do officers of a public corporation have an affirmative obligation to monitor corporate affairs? Yes, according to Judge Walsh in his recently issued memorandum opinion in Miller v. McDonald (In re World Health Alternatives, Inc.).1 Although "Caremark" oversight liability had previously generally only been imposed on directors of public corporations, the Bankruptcy Court for the District of Delaware determined that officers are not immune from such liability as a matter of law.

Must creditors holding claims denominated in a foreign currency against a debtor in a US bankruptcy case bear the risk of a postpetition decline in the value of the dollar? In In re Global Power Equipment Group Inc.,1 the Bankruptcy Court for the District of Delaware says yes, holding that, pursuant to section 502(b) of the Bankruptcy Code, a contested claim denominated in foreign currency must be converted into United States currency as of the petition date instead of a later judgment or breach date.

The Conversion Date Dispute

Sometimes the interpretation of the Bankruptcy Code leads to unexpected results. In a recent case, the US Bankruptcy Appellate Panel of the Ninth Circuit (BAP) has ruled that section 510(b) of the Bankruptcy Code requires the subordination of certain claims against a debtor to all equity interests in the debtor, even though such subordination may mean that the holders of the claims will receive nothing on the claims.

A company attempting to reorganize its affairs in bankruptcy may seek to enjoin its creditors or other third parties from suing members of the company's senior management team during the course of the reorganization proceedings, so that the senior management members can devote their time and resources to the reorganization effort without distraction. Courts throughout the country have applied differing standards in determining when the granting of an injunction of proceedings against a non-debtor is appropriate.