In a recent decision, the Court of Appeals for the Ninth Circuit shocked observers by holding that bankruptcy courts have the power to recharacterize claims on account of unpaid debts as equity infusions that cannot be repaid until all creditor claims have been satisfied. In In re Fitness Holdings Int’l, Inc., 714 F.3d 1141 (9th Cir.
Many loan agreements include clauses that permit borrowers to repay debt prior to the maturity date only if they make additional payments that are typically referred to as “prepayment premiums” or “make-whole payments.” The purpose of such prepayment premiums is to compensate lenders for what would otherwise be the loss of their bargained-for yields for the scheduled lives of their loans.
A June 2013 decision from the United States Bankruptcy Court for the Eastern District of North Carolina Greenville Division, In re L.L. Murphrey Company, 2013 WL 2451368 (Bankr. E.D.N.C. June 6, 2013), highlights the importance of due diligence in connection with assignments of security interests.
Probably the most significant bankruptcy law development in the past several years has been the narrowing of bankruptcy courts’ constitutional authority to enter final judgments. See Stern v. Marshall, 131 S. Ct.
A recent New York trial court decision upheld a common full recourse trigger in a non recourse carve-out guaranty by holding that a voluntary bankruptcy filing by the borrower enabled the lender to seek immediate full repayment from the guarantor under the terms of the guaranty, even though the loan was subject to New York State's "one action rule" and the lender had pursued a foreclosure action against the property securing the loan.
In a recent opinion on an issue of first impression,1 the United States Court of Appeals for the Second Circuit held that foreign entities seeking recognition under Chapter 15 of the Bankruptcy Code must, in addition to satisfying the requirements for recognition set forth in that chapter, have a residence, domicile, place of business or assets in the United States.
Part Two of a Two-Part Article
Last month, we discussed “prepayment premiums” or “make-whole payments.” The purpose of such prepayment premiums is to compensate lenders for what would otherwise be the loss of their bargained-for yields for the scheduled lives of their loans. Prepayment premiums are usually either based on a fixed fee, such as a percentage of the principal balance at the time of prepayment, or a yield maintenance formula that approximates the lenders’ damages in the event of prepayment.
A recent decision of the Second Circuit Court of Appeals has added an additional eligibility requirement for the filing of Chapter 15 cases. In Drawbridge Special Opportunities Fund LP v. Barnet (In re Barnet), ___ F.3d ___, 2013 WL 6482499 (2d Cir.
One of the effects of commercial globalization is that the bankruptcy filing of a debtor with transnational business relationships will sometimes result in a clash between the substantive bankruptcy laws of different countries. A frequent question is whether the bankruptcy laws of a foreign country should be brought to bear upon creditors located in the United States, even where foreign bankruptcy law is at odds with the laws of the United States.