Summary

An Illinois appellate court, applying Indiana and federal law, has held that neither a bankruptcy exclusion nor an insured versus insured exclusion applied to bar coverage for claims brought by a bankruptcy trustee.  Yessenow v. Exec. Risk Indem., Inc., 2011 WL 2623307 (Ill. App. Ct. June 30, 2011).

Much attention in the commercial bankruptcy world has been devoted recently to judicial pronouncements concerning whether the practice of senior creditor class “gifting” to junior classes under a chapter 1 1 plan violates the Bankruptcy Code’s “absolute priority rule.” Comparatively little scrutiny, by contrast, has been directed toward significant developments in ongoing controversies in the courts regarding the absolute priority rule outside the realm of senior class gifting— namely, in connection with the “new value” exception to the rule and whether the rule was written out of the Bankr

A business consultant who contracted to receive a percentage of a company’s shares in exchange for helping the company go public—but never actually received those shares and obtained a money judgment against the company instead—was not a holder of equity for purposes of subordination under the Bankruptcy Code, the U.S. Court of Appeals for the Ninth Circuit has determined.

The U.S. Court of Appeals for the Sixth Circuit has held that as the assignee of a debtors’ mortgage loan, a bank’s security interest was superior to the Chapter 13 Trustee’s interest as a judicial lien creditor. The ruling in Rogan v. Bank One, National Association (In re Cook), 457 F.3d 561 (6th Cir. 2006) affirmed the holdings of two lower courts. In December 2000, the debtors entered into a loan transaction with NCS Mortgage Lending Company (“NCS”), which was secured by a properly recorded mortgage.

On March 7, 2007, the Second Circuit Court of Appeals held that "in the Chapter 11 context, whether a pre-plan settlement's distribution plan complies with the Bankruptcy Code's priority scheme will be the most important factor for a Bankruptcy Court to Consider in approving a settlement under Bankruptcy Rule 9019." In re Iridium Operating LLC, No. 05-2236 (2d Cir. March 7, 2007)

The Supreme Court unanimously held on March 20, 2007, that an unsecured lender could recover contractbased legal fees “incurred in [post-bankruptcy] litigation” on “issues of bankruptcy law.” Travelers Casualty & Surety Co. of America v. Pacific Gas & Elec. Co., __ U.S. __ (March 20, 2007). Op., at 1, 3. In doing so, the court vacated a summary ruling by the Ninth Circuit last year. 167 Fed. Appx. 593 (9th Cir. 2006) (held, “attorney fees… not recoverable in bankruptcy for litigating issues ‘peculiar to federal bankruptcy law.’“), citing In re Fobian, 951 F.2d 1149, 1153 (9th Cir.

Law360, New York (May 5, 2016, 12:02 PM ET) -- A core principle of bankruptcy tax litigation holds that “bankruptcy courts have universally recognized their jurisdiction to consider tax issues brought by the debtor, limited only by their discretion to abstain.” IRS v. Luongo, 259 F.3d 323, 329-330 (5th Cir. 2001) (citing In re Hunt, 95 B.R. 442, 445 (Bankr. N.D. Tex. 1989). The Second Circuit recently departed from that generally accepted principle in United States v. Bond, 762 F.3d 255 (2d Cir. 2014).

Recent Developments in Bankruptcy Law, April 2016 (Covering cases reported through 545 B.R. 785 and 810 F.3d 860) RICHARD LEVIN Partner +1 (212) 891-1601 [email protected] © Copyright 2016 Jenner & Block LLP. 353 North Clark Street Chicago, IL 60654-3456. Jenner & Block is an Illinois Limited Liability Partnership including professional corporations. Attorney Advertising. Prior results do not guarantee a similar outcome.

In Redmond v. Jenkins (In re Alternate Fuels, Inc.), 789 F.3d 1139 (10th Cir. 2015), a panel of the U.S. Court of Appeals for the Tenth Circuit upheld bankruptcy courts’ authority to recharacterize insider debt as equity. In so ruling, the court rejected an argument that recent U.S. Supreme Court precedent prevents bankruptcy courts from using section 105(a) of the Bankruptcy Code to recharacterize debt as equity. Nevertheless, after upholding the recharacterization doctrine, the Tenth Circuit panel split on the doctrine’s application.