Imagine: you are a lender that has loaned substantial sums of money to an individual, secured by real property owned by the borrower. After the borrower defaults and negotiations fail, you seek and obtain the appointment of a receiver. But now litigation ensues—about the loan documents, about contract defaults, about interest rates, about foreign law. After a substantial investment of time and money, your trial date draws closer. At some point during this odyssey, your borrower secretly transfers the real property collateral to a newly-created, single-member LLC.

A debtor’s prepetition causes of action and other legal interests typically become property of the debtor’s estate under section 541 of the Bankruptcy Code. In a chapter 11 case, this often leaves the trustee (or debtor in possession) with the sole authority to pursue – or not pursue – such causes of action postpetition. Although the trustee is generally required to maximize the value of the estate, situations can arise where a trustee refuses to pursue litigation that is otherwise in the estate’s best interest.

If a creditor violates the automatic stay by seizing property of the estate and fails to cure that violation before the debtor files an action under sec. 362(k), may the debtor recover his attorney’s fees for prosecuting the stay violation under sec. 362(k)?  The Ninth Circuit Court of Appeals recently ruled that, in these circumstances, attorney’s fees incurred in prosecuting a stay violation are recoverable by a debtor against the creditor committing the violation.

An important battle about the place of secured lending in the United States economy is set to begin. When the battle ends, fundamental assumptions about the expected recovery rates for defaulted secured loans may change.

The meaning of "unreasonably small capital" in the context of constructively fraudulent transfer avoidance litigation is not spelled out in the Bankruptcy Code. As a result, bankruptcy courts have been called upon to fashion their own definitions of the term. Nonetheless, the courts that have considered the issue have mostly settled on some general concepts in fashioning such a definition. In Whyte ex rel. SemGroup Litig. Trust v. Ritchie SG Holdings, LLC (In re SemCrude, LP), 2014 BL 272343 (D. Del. Sept.

Although likely not the intent of In re Siag Aerisyn, LLC, a recent decision from the United States Bankruptcy Court for the Eastern District of Tennessee Southern Division, some might argue that the opinion serves as a how-to guide for masking a capital contribution by an affiliate as a loan constituting bona fide debt.

The U.S. Court of Appeals for the Fifth Circuit, on Oct. 16, 2014, held that a “good faith transferee” in a fraudulent transfer suit “is entitled” to keep what it received “only to the extent” it gave “value.” Williams v. FDIC (In re Positive Health Management), 2014 WL 5293705, at *8 (5th Cir. Oct. 16, 2014). Reversing in part the district and bankruptcy courts, the Fifth Circuit narrowed their holding that the debtor had “received reasonably equivalent value in exchange for the debtor’s cash transfers.” Id. at *1-2.

In re Stacy’s, Inc., 508 B.R. 370 (Bankr. D. S.C. 2014) –

A debtor sold substantially all of its assets after negotiating with its primary secured creditor for carve-outs from the sale proceeds for administrative priority and general unsecured claims.  When the administrative claims turned out to be greater than anticipated, the debtor sought court approval to use additional proceeds to pay income tax and other claims.

An article appearing in the July/August 2014 issue of the Business Restructuring Review discusses a ruling by an Oregon bankruptcy court that held unenforceable a negative covenant in a limited liability company's operating agreement prohibiting the company from filing a bankruptcy petition, among other actions.

Secured transactions typically include two key documents, which are often executed simultaneously: a promissory note memorializing loan and repayment terms executed by the borrower in favor of the lender and a security agreement granting the lender an interest in collateral securing the borrower’s debt owed to the bank. If a borrower ends up filing for bankruptcy, the bank likely will seek to enforce the security agreement against the borrower and recover the collateral. However, as made clear by the U.S.