The U.S. Court of Appeals for the Fifth Circuit recently held that a Creditor Exclusion provision in D&O insurance coverage may result in significant limitations on the coverage provided to the D&Os, when the underlying dispute is with a creditor in its capacity as such.
On June 28, 2016, Judge Chapman of the U.S. Bankruptcy Court for the Southern District of New York ruled in Lehman Brothers Special Financing Inc. v. Bank of America National Association, et al.(Adv. Proc. No. 10-03547 (Bankr. S.D.N.Y.
In today's low interest rate environment, the difference between a contractual interest rate and the federal judgment rate can be quite significant. It is not surprising, therefore, that this issue has become hotly litigated in cases involving solvent Chapter 11 debtors. Recently, the U.S. District Court for the Northern District of Illinois, in Colfin Bulls Funding A v. Paloian (In re Dvorkin Holdings), 547 B.R. 880 (N.D. Ill.
Upon receiving notice of a debtor’s bankruptcy case, the prudent debt collector typically files a proof of claim, in the hope of receiving some distribution from the debtor’s bankruptcy estate. Absent a fraudulent claim by the debt collector, the Bankruptcy Code specifically provides for the filing of claims against the debtor’s estate. So how could a debt collector be sued for doing what the Code allows? It could happen if debts a collector actually holds are barred from enforcement under a state statute of limitations.
The Supreme Court again will be addressing the powers of bankruptcy courts. At the end of the term, the Court granted certiorari in Czyzewski v. Jevic Holding Corp. to decide whether a bankruptcy court may authorize the distribution of settlement proceeds in a way that violates the statutory priority scheme in the Bankruptcy Code. No. 15-649, 2016 WL 3496769 (S. Ct. June 28, 2016). The Supreme Court is expected to address this fundamental bankruptcy issue sometime early next year.
Background
In a highly anticipated decision, the Bankruptcy Court for the Southern District of New York (the "Court") on June 28, 2016, dismissed Counts I through XIX of Lehman Brothers Special Financing Inc.'s ("LBSF") fourth amended complaint (the "Complaint") in Lehman Bros. Special Fin. Inc. v. Bank of America, N.A., et al.1 In doing so, the Court removed the majority of the approximately 250 noteholder, issuer and indenture trustee defendants from the LBSF lawsuit to recover over $1 billion distributed in connection with 44 swap transactions.
We’ve all seen it. The business opportunity looks enticing but is laced with risk about a potential bankruptcy filing down the road. As bankruptcy lawyers we are often asked how deals can be structured to prevent a potential bankruptcy filing.
The bankruptcy court overseeing the Lehman Brothers chapter 11 cases rejected efforts by Lehman Brothers Special Financing Inc. (LBSF) to recover roughly $1 billion in payments made to numerous noteholder defendants from the liquidation of collateral originally pledged to secure both obligations under notes issued by special purpose entities and credit default swap (CDS) obligations to LBSF, holding that the termination of the swap and liquidation and distribution of the collateral were protected by the Bankruptcy Code’s safe harbor.
A lender’s (“Lender”) derivative breach of fiduciary duty claims on behalf of Chapter 7 guarantor-Debtors cannot be time-barred because of Lender’s knowledge of the “[d]efendants’ conduct,” held the U.S. District Court for the District of Delaware on June 22, 2016. In re AMC Investors, LLC, 2016 U.S. Dist. LEXIS 80861, *16 (Del. June 22, 2016).
Court holds that distributions made pursuant to priority payment provisions contained in CDO transactions are protected by Section 560 of the Bankruptcy Code