If you have negotiated an intercreditor agreement, you are familiar with the lengthy bankruptcy waivers typically drafted by counsel for first-lien lenders.

Although property obtained by a debtor after filing for bankruptcy is usually safe from creditors, a recent case from the Ninth Circuit Bankruptcy Appellate Panel allowed a Chapter 7 Trustee to sell real property obtained by the debtors post-petition.

Recently, two courts of appeal dismissed as moot under 11 U.S.C. § 363(m) appeals of orders   authorizing the sale of assets. The courts’ analysis focused on whether granting the appellant’s relief  from the lower courts’ order would affect the asset sale. Thus the trend in the appellate courts is that only appeals that will not affect the sale itself (such as a dispute over the distribution of sale proceeds) are not subject to being dismissed as moot.

In Obsidian Finance Group, LLC v. Cox, Nos. 12-35238, 12-35319 (9th Cir. Jan. 17, 2014), the Ninth Circuit held that First Amendment protections under the Supreme Court’s landmark opinion in Gertz v. Robert Welch, Inc., 418 U.S.

In Jaffé v. Samsung Electronics Co. (In re Qimonda AG), 737 F.3d 14 (4th Cir. 2013) (No. 12-1802), the Fourth Circuit affirmed a bankruptcy court’s ruling protecting licensees’ rights in connection with the recognition of a German insolvency proceeding.  In Jaffe, the foreign debtor’s administrator petitioned the U.S. bankruptcy court for powers under Chapter 15 of the U.S.

A recent decision in the bankruptcy case of Fisker Automotive Holdings, Inc., et al. has called into question a long-held belief that secured creditors hold dear: that debt purchased at a discount can nonetheless be credit bid at its full face amount at a collateral sale. While it remains to be seen how other courts will interpret Fisker, this decision has the potential to restrict participation in Bankruptcy Code section 363 sales and dampen liquidity in the robust secondary markets.

Heralded by debtor’s attorneys as “a wonderful loophole”¹ in the Bankruptcy Code, a debtor who has primarily business, rather than consumer, debts can qualify for a speedy Chapter 7 discharge despite a high earning capacity that would permit the debtor to repay some, or even all, of her debt. Though rarely used, banks faced with a high-income debtor’s Chapter 7 case can move to convert the case to Chapter 11 under 11 U.S.C. §706(b) to force the debtor to repay some of her debt prior to receiving a discharge. 

When structuring a complex debt financing, financiers need to consider whether unsecured and structurally subordinated “mezzanine” debt ought to be replaced in the capital hierarchy with secured second lien credit. The relatively lower financing cost for second lien credit is based on the assumption that the second lien lenders might obtain some equity value from the liens on the residual collateral which would not otherwise be available with such “mezzanine” debt.

Last week, the 8th Circuit B.A.P. affirmed, first noting that criminal judgments, including restitution awards and liens, are afforded special protection from bankruptcy discharge.

The case of Simon v. FIA Card, Services, N.A., recently decided by the Third Circuit, demonstrates the potential for conflicts between the Bankruptcy Code and the Fair Debt Collection Practices Act (“FDCPA”) and emphasizes that banks should approach bankruptcy debtors with caution.