On May 6, 2015, the Court of Appeals for the Ninth Circuit considered whether so-called“Deprizio waivers,”¹ where an insider guarantor waives indemnification rights against a debtor, can insulate the guarantor from preference liability arising from payments made by the obligor to the lender. The Ninth Circuit held that if such a waiver is made legitimately—not merely to avoid preference liability—then the guarantor is not a “creditor” and cannot be subject to preference liability.

The U.S. Court of Appeals for the Seventh Circuit recently held that a secured creditor must file its proof of claim no later than the 90-day deadline under Federal Rule of Bankruptcy Procedure 3002(c) in order to receive distributions under a Chapter 13 plan of reorganization.

A copy of the opinion is available here:  Link to Opinion.

In re Mississippi Valley Livestock, Inc., 745 F.3d 299 (7th Cir. 2014) –

A debtor sold cattle for the account of a cattle producer and then remitted the proceeds to the producer.  A chapter 7 trustee sought to recover the payments as preferential transfers.  The trustee lost in both the bankruptcy and district courts, and then appealed to the 7th Circuit.

In Official Committee of Unsecured Creditors v. Whalen (In re Enron Corp.), the Bankruptcy Court for the Southern District of New York considered whether the debtor’s pre-bankruptcy payment of an employment bonus one day before it became due was “for or on account of an antecedent debt owed by the debtor before such transfer was made” for purposes of determining whether section 547(b) of the Bankruptcy Code made the payment avoidable as a preferential transfer.

The United States Bankruptcy Court for the Southern District of New York has denied approval of a settlement between Adelphia and its D&O insurers pursuant to which the insurers would have bought back their interests in the relevant policies issued to Adelphia for $32.5 million "with claims of others to policy proceeds...attaching to the proceeds of the sale."

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (the “BAPCPA”) created an additional category of administrative expenses

Recently, in In re Northwest Airlines Corp.,1 Bankruptcy Judge Allan Gropper issued an opinion requiring a group of hedge funds that had formed an ad hoc committee of equity security holders (the “Ad Hoc Equity Committee”) to disclose “the amounts of claims or interests owned by the members of the committee, the times when acquired, the amounts paid therefor, and any sales or other disposition thereof” in order to comply with Rule 2019 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”).

Background

In Travelers Cas. and Sur. Co. of America v. Pacific Gas & Electric Co., 127 S. Ct. 199 (2007) ("Travelers"), the United States Supreme Court overturned a Ninth Circuit Court of Appeals opinion that had made pre-petition contractual provisions awarding attorneys' fees to the prevailing party unenforceable in bankruptcy to the extent the parties litigated issues peculiar to bankruptcy law. The Ninth Circuit opinion, Fobian v. Western Farm Credit Bank (In re Fobian), 951 F.2d 1149 (9th Cir.

Summary: A recent Tennessee case requires secured lenders to verify the debtor's receipt of the notice of a foreclosure sale of personal property.

The district court in Hartford Accident & Indemnity Company, et al. v. American Capital Equipment, et al., No. 06-0891 (U.S. Dist. Ct. W.D. Pa. May 11, 2007), affirmed that Skinner Engine Company's insurers have standing to move to dismiss Skinner's chapter 11 bankruptcy case and to challenge its bankruptcy plan. However, the court also affirmed the bankruptcy court's denial of the insurers' motion to dismiss the bankruptcy case.