On April 29, 2014, power giant Energy Future Holding Corp. (“Energy Future”), along with 70 subsidiaries, filed for chapter 11 protection in the District of Delaware as part of a deal it has reached through lengthy negotiations with some of its largest senior creditors to restructure roughly $50 billion in debt.
INTRODUCTION
The United States Bankruptcy Court for the Eastern District of Virginia (the “Court”) issued an opinion limiting the ability of a “loan to own” secured creditor to credit bid at an auction for the sale of substantially all of the debtors’ assets.1 The Court focused on the fact that the creditor’s conduct interfered with the sale process and was motivated by its desire to “own the Debtors’ business” rather than to have its d
Bankruptcy practitioners are anxiously awaiting a U.S. Supreme Court ruling that will determine whether a party can waive its right to trial before an Article III tribunal.
Chances are if you are a provider of goods or services and do business pursuant to some form of a short-term or long-term credit arrangement that you have received correspondence from a bankruptcy Trustee or a Chapter 11 debtor demanding money on the basis of an alleged “preference.” Perhaps some of you have even been served with a formal complaint demanding the same. If so, then this article is meant to take some of the mystery out of preferences and to offer some advice as to what to do when you receive such a correspondence.
WHAT IS A PREFERENCE?
Debtors must provide known creditors with actual notice of a claims bar date if they want the bar date to apply to those creditors. Such was the holding in In re Majorca Isles Master Association, Inc., Case No. 12-19056-AJC, Dkt. No. 222 (Bankr. S.D. Fla. March 27, 2014), where the bankruptcy court stated that when both a debtor and a creditor are “guilty in the handling of a claim and the [d]ebtor is aware of the creditor’s claim, then a tie goes to the creditor[,]” and the creditor’s claim will be allowed.
In a matter of first impression, the United States District Court for the Southern District of New York recently held that former employees of a subcontractor of Hawker Beechcraft Corporation (“Hawker”)—a company that emerged from bankruptcy in 2013 and was purchased by Textron Inc.
In an important decision for lenders, the 1st Circuit Court of Appeals recently decided In re SW Boston Hotel Venture LLC, holding that a bankruptcy court was right to give a lender a claim for post-petition interest beginning on the date of the sale of its collateral rather than the commencement date of the debtor’s bankruptcy case.
A recent opinion out of the United States Bankruptcy Court for the Eastern District of Virginia (Richmond Division) serves as a reminder to secured creditors to steer clear of conduct that a bankruptcy court may deem inequitable and provide the court with cause to limit the secured creditor’s credit bid rights. In In re The Free Lance-Star Publishing Co.