T he recent surge in activity in the claims trading market in the wake of Lehman Brothers and other high-profile bankruptcies has created a backlog of open trades and heightened price volatility. This is a perilous combination. The lack of standardized trading documentation and uniform trading conventions, as well as the dramatic influx of new counterparties into the claims market, are factors that have contributed to longer settlement timeframes and increased uncertainty in the market.
On August 4, 2010, the New Jersey Superior Court, Appellate Division extended equitable principles previously applied in mortgage foreclosure cases to how far an unsecured judgment creditor could go to satisfy its lien against a debtor, deciding to follow a line of cases standing for the principal that “even in the absence of express statutory authorization, a court has inherent equitable authority to allow a fair market value credit in order to prevent a double recovery by a creditor against a debtor.” Moreover, in the case, MMU of New York, Inc. v.
Some in Congress would like to see earmarking eliminated completely, but the most you're likely to see are additional reforms to the earmarking process. Both sides of the debate have strong champions who have no interest in giving in to their opponents. At the same time, a coalition of lobbyists and public interest advocates are promoting additional earmark reforms that deserve serious consideration.
In September of this year, the Honorable Mary F. Walrath, the presiding Judge in the DHP Holdings bankruptcy, issued a decision addressing the effect of a forum selection clause when deciding a motion to change venue. This issue came before the court in an adversary action filed by DHP against The Home Depot. After DHP filed for bankruptcy, the company sued Home Depot for $5.5 million alleging Home Depot owed the company for an outstanding account receivable.
In the Matter of TCI 2 Holdings, LLC, 428 B.R. 117 (Bankr. D.N.J. 2010)
CASE SNAPSHOT
Hitchin Post Steak Co v General Electric Capital Corporation (In re HP Distribution, LLP), 436 B.R. 679 (Bankr. D. Kan. 2010)
CASE SNAPSHOT
The United States Bankruptcy Court for the District of Kansas considered whether commercial vehicle leases that contained Terminal Rental Adjustment Clauses (or TRAC provisions) were true leases under Section 365 of the Bankruptcy Code or, instead, disguised financing transactions. The court held that the TRAC leases were true leases that must be either assumed or assigned pursuant to the terms of Section 365.
In St. Hill v. Tribeca Lending Corp., Case No. 09-2214, 2010 WL 2997724 (3rd Cir. Dec. 8, 2010), the Third Circuit showed that, in determining whether the Truth In Lending Act (TILA) applied to a credit transaction, it would look beyond obvious facts to ascertain a transaction's "primary purpose."
The early 2000s witnessed a wave of chapter 11 filings by entities with liability for asbestos personal-injury claims. The large number of filings was matched by the variety of legal strategies that companies pursued to address their asbestos liabilities in chapter 11. The chapter 11 case of Quigley Company, Inc. ("Quigley"), was one of the last large asbestos cases to file in the 2000s and represents one of the more interesting strategies for dealing with asbestos liabilities in chapter 11.
The United States Bankruptcy Court for the District of New Jersey has issued a published opinion authorizing a trustee’s transfer of structured settlement payments pursuant to the New Jersey Structured Settlement Protection Act, N.J.S.A. 2A:16-63, et seq. (NJ SSPA). In In Re Jackus, 2011 WL 118216 (Bankr. N.J. Jan. 14, 2011), the Bankruptcy Court held that, inter alia, the bankruptcy court had jurisdiction to authorize the transfer under the NJ SSPA, and the transfer was in the “best interest” of the bankruptcy estate and its creditors.
So what do railroad barons, second lien lenders and satellites have in common? Strangely, the derailment of the gifting doctrine for cram-down plans, at least, in the Second Circuit. In an Opinion filed on February 7, 2011, the Second Circuit issued what amounted to a teaser for bankruptcy professionals. It started with a decision by Bankruptcy Judge Gerber of the Southern District of New York to confirm a Chapter 11 plan that included a “gift” from the second lien lenders to equity, even though unsecured creditors were not being paid in full.