In a recent opinion, JELD-WEN, Inc. v. Van Brunt (In re Grossman’s Inc.), 607 F.3d 114 (3d Cir. 2010), the United States Court of Appeals for the Third Circuit overruled its prior decision in Avellino & Bienes v. M. Frenville Co. (In re Frenville Co.), 744 F.2d 332 (3d Cir. 1984), which adopted the accrual test, a standard for determining the existence of a “claim” under the Bankruptcy Code.

So what do railroad barons, second lien lenders and satellites have in common? Strangely, the derailment of the gifting doctrine for cram-down plans, at least, in the Second Circuit. In an Opinion filed on February 7, 2011, the Second Circuit issued what amounted to a teaser for bankruptcy professionals. It started with a decision by Bankruptcy Judge Gerber of the Southern District of New York to confirm a Chapter 11 plan that included a “gift” from the second lien lenders to equity, even though unsecured creditors were not being paid in full.

Yes, but only if the government declines to intervene in the action. United States ex rel. Kolbeck v. Point Blank Solutions, Inc., 1:08-cv-1187 (E.D. Va.), recently addressed this issue.

On February 7, 2011, in a highly anticipated decision, the Second Circuit Court of Appeals held that in Chapter 11 reorganizations, senior creditors may not “gift” recoveries to junior creditors and/or equity interest holders over the objection of an intervening class. In In re DBSD N.A., Inc., __ F.3d __, 2011 WL 350480 (2d Cir. 2011), the majority ruled that such “gift plans” run afoul of the “absolute priority rule,” which is codified in Section 1129(b) of Bankruptcy Code. The decision has significant implications for future bankruptcy cases in New York.

While there has not been much good news for the mortgage banking industry coming out of bankruptcy courts in years, a recent opinion issued by the United States Court of Appeals for the Fifth Circuit provides not just good news, but very good news for mortgage lenders. The Fifth Circuit's opinion in Wilborn v. Wells Fargo Bank, N.A. (In re Wilborn), 609 F.3d 748 (5th Cir.

The United States Court of Appeals for the Second Circuit (the “Second Circuit”) on February 7, 2011 issued an opinion rejecting the often used gifting doctrine in the context of a plan of reorganization on the one hand, while affirming vote designation for claims not purchased in good faith on the other.In re DBSD N. Am., Inc., __ F.3d __, 2011 WL 350480 (2d Cir. Feb. 7, 2011).

The taxpayer was able to convince the court that the creditors who got the stock in the reorganization were not the prior owners. Because the events occurred in 1992, under a prior version of the continuity of proprietary interest rules, continuity of ownership was broken and a section 338(h)(10) election could be made and the basis in the assets inside the corporation stepped up to fair market value, with no tax liability because the seller was in bankruptcy with large net operating losses (NOLs).

The ability of a single asset real estate debtor in a bankruptcy case to utilize a non-consenting secured creditor's cash collateral has been limited by a recent decision from the Bankruptcy Appellate Panel of the Sixth Circuit in In re Buttermilk Towne Center, LLC, 2010 FED App. 0010P (B.A.P. 6th Cir. 2010).

On February 7, 2011 the United States Court of Appeals for the Second Circuit issued its eagerly awaited opinion in the consolidated appealIn re: DBSD North America, Inc., Docket Nos. 10-1175, 10-1201, 10-1352, 2010 U.S. App. LEXIS 27007.

The Federal Bankruptcy Act prohibits public and private employers from engaging in various discriminatory acts against individuals because they have filed for bankruptcy. 11 U.S.C. § 525. Inexplicably, the statutes applicable to public and private employers are not identical. The law applicable to a public employer, for example, specifically provides that it "may not . . . deny employment to" one who has filed for bankruptcy. 11 U.S.C. § 525(a). This "deny employment to" language does not appear in the statute for private employers. 11 U.S.C. § 525(b).