On June 27, 2014, in National Heritage Foundation, Inc. v. Highbourne Foundation, 1 the United States Court of Appeals for the Fourth Circuit, agreeing with decisions by the Bankruptcy Court for the Eastern District of Virginia and the District Court for the Eastern District of Virginia, which were issued upon remand from a prior appeal, held that the third-party non-debtor release provision in the chapter 11 plan of reorganization of National Heritage Foundation, Inc. was invalid.
When an oversecured creditor forecloses on a debtor’s property after the automatic stay has been lifted, does the Bankruptcy Code (as opposed to state law) govern recovery of attorney’s fees and other amounts from the sale proceeds? Does the bankruptcy court have jurisdiction over the distribution of such proceeds? In Goldsby v.
There is nothing more frustrating to a creditor than finally getting paid for goods or services, only to have a customer file for bankruptcy protection and, as a result, ending up on the receiving end of a bankruptcy preference action.
A creditor who settles with a debtor during a bankruptcy case must be sure to continue following the case during the plan stage, or risk the plan affecting the creditor’s rights against third parties. Iberiabank learned that lesson the hard way, after a plan was confirmed in the chapter 11 case of FFS Data, Inc.
When a bank holding company files a chapter 11 case, a key factor to the success of the case will be whether the debtor previously made any commitment to a federal depository institution regulatory agency, such as the FDIC, to maintain the capital of the debtor’s bank subsidiary. This is because section 365(o) of the Bankruptcy Code provides that the debtor is deemed to have assumed such obligations, and any claim for subsequent breach of these obligations is entitled to priority under section 507(a)(9) of the Bankruptcy Code. The FDIC often demands
On June 27, 2014, the Fourth Circuit issued its second opinion in the National Heritage Foundation, Inc.
The filing of a bankruptcy petition creates a bankruptcy estate that includes “all legal or equitable interests of the debtor in property as of the commencement of the case.” Highland Capital Mgmt. LP v. Chesapeake Energy Corp. (In re Seven Seas Petroleum, Inc.), 522 F.3d 575, 584 (5th Cir. 2008) (quoting 11 U.S.C. § 541(a)(1)). This includes “rights of action such as claims based on state or federal law.” Id.
In a recent decision welcomed by creditors, the United States District Court for the Eastern District of North Carolina reversed a bankruptcy court order confirming a Chapter 11 debtor’s plan because the debtor engaged in “obvious gerrymandering” in order to secure the votes necessary to obtain confirmation of the plan.
I. Facts
One of the most dramatic tools a lender can use in the collection of a loan is the involuntary bankruptcy case. It is dramatic because of the implications for both the debtor and the lender who files the case.