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    Fifth Circuit holds mere acceleration does not trigger prepayment premium
    2014-02-06

    The U.S. Court of Appeals for the Fifth Circuit held on Jan. 27, 2014 that a lender’s acceleration due to a borrower’s payment default did not trigger a prepayment premium. In re Denver Merchandise Mart, Inc., 2014 WL 291920, *1 (5th Cir. Jan. 27, 2014) (“Denver Merchandise”). Affirming the lower courts’ application of state law, the court held that “the plain language of the contract does not require the payment of the Prepayment Consideration in the event of mere acceleration.” Id. at *5.  

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    Filed under:
    USA, Banking, Insolvency & Restructuring, Litigation, Schulte Roth & Zabel LLP, Debtor, Interest, Liquidated damages, Default (finance), Fifth Circuit
    Authors:
    Michael L. Cook
    Location:
    USA
    Firm:
    Schulte Roth & Zabel LLP
    Fifth Circuit Holds Asset Purchaser Unable To Acquire Rejected License Agreement
    2018-11-02

    A license agreement “deemed rejected by operation of law” could not be acquired under a court-approved asset purchase agreement, held the U.S. Court of Appeals for the Fifth Circuit on Oct. 29, 2018. In re Provider Meds LLC, 2018 WL 5317445, *2 (5th Cir. Oct. 29, 2018). Although the acquirer claimed “that it purchased a patent license from [the] debtors in bankruptcy sales of their estates,” the court explained that “a rejected executory contract … could not have been transferred by the bankruptcy sales in question … .” Id., at *1.

    Filed under:
    USA, Connecticut, Insolvency & Restructuring, Litigation, Patents, Schulte Roth & Zabel LLP, NLRB, Fifth Circuit, First Circuit
    Authors:
    Michael L. Cook
    Location:
    USA
    Firm:
    Schulte Roth & Zabel LLP
    Fifth Circuit protects secured lender who bypasses Chapter 11 reorganization plan
    2013-08-12

    The U.S. Court of Appeals for the Fifth Circuit held on August 5 that a secured lender’s disputed “lien on [the debtor’s] principal asset survived . . . confirmation of [the debtor’s] Chapter 11 . . . reorganization plan” because the lender had not participated in the bankruptcy case.S. White Transportation, Inc. v. Acceptance Loan Co., 2013 WL 3983343, *1,*3 (5th Cir. Aug. 5, 2013). Had the lender participated in the case, the court reasoned, its lien might have been avoided.Id., at *1, citingIn re Ahern Enterprises, Inc., 507 F.3d 817, 822 (5th Cir.

    Filed under:
    USA, Banking, Insolvency & Restructuring, Litigation, Schulte Roth & Zabel LLP, Bankruptcy, Debtor, Secured creditor, Fifth Circuit
    Authors:
    Michael L. Cook
    Location:
    USA
    Firm:
    Schulte Roth & Zabel LLP
    Fifth Circuit Holds Lease To Be a Secured Loan
    2018-08-14

    A purported conditional sale agreement “created a security interest rather than a lease,” held the U.S. Court of Appeals for the Fifth Circuit on Aug. 7, 2018. In re Pioneer Health Services Inc., 2018 WL 3747537, *3 (5th Cir. Aug. 7, 2018). Affirming the lower courts’ finding “that the relevant agreements were not ‘true leases,’” the court rejected a bank’s “motion to compel payment under [its] contract as an unexpired lease or an administrative expense.” Id., at *1. The economic substance, not the form of the transaction, was decisive.

    Filed under:
    USA, Insolvency & Restructuring, Litigation, Schulte Roth & Zabel LLP, Secured loan, Uniform Commercial Code (USA), Fifth Circuit, Seventh Circuit
    Authors:
    Michael L. Cook
    Location:
    USA
    Firm:
    Schulte Roth & Zabel LLP
    Fifth Circuit upholds “absurd” cramdown interest rate
    2013-03-20

    The U.S. Court of Appeals for the Fifth Circuit held on March 1, 2013, that a bankruptcy court had not erred in applying a prime plus 1.75 percent interest rate to a secured lender’s $39 million claim under a "cramdown" plan of reorganization. Wells Fargo Bank N.A v. Texas Grand Prairie Hotel Realty, LLC (In the Matter of Texas Grand Prairie Hotel Realty, LLC), __ F.3d __, 2013 WL 776317 (5th Cir. Mar. 1, 2013).

    Filed under:
    USA, Insolvency & Restructuring, Litigation, Schulte Roth & Zabel LLP, Debtor, Collateral (finance), United States bankruptcy court, Fifth Circuit
    Authors:
    Lawrence V. Gelber , Neil S. Begley
    Location:
    USA
    Firm:
    Schulte Roth & Zabel LLP
    Fifth Circuit Affirms Shareholder Veto of Chapter 11 Petition
    2018-05-30

    “Federal law does not prevent a bona fide shareholder from exercising its right to vote against a bankruptcy petition just because it is also an unsecured creditor,” held the U.S. Court of Appeals for the Fifth Circuit on May 22, 2018. In re Franchise Services of North America Inc., 2018 WL 2325909, *1 (5th Cir. May 22, 2018). According to the court, applicable Delaware law would not “nullify the shareholder’s right to vote against the bankruptcy petition.” Id.

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    Filed under:
    USA, Insolvency & Restructuring, Litigation, Schulte Roth & Zabel LLP, Shareholder, Unsecured creditor, Fifth Circuit
    Authors:
    Michael L. Cook
    Location:
    USA
    Firm:
    Schulte Roth & Zabel LLP
    Secured lender’s full credit bid barred later recovery from guarantors
    2013-03-06

    The U.S. Court of Appeals for the Fifth Circuit held on Feb. 28, 2013, that a secured lender’s full credit bid for a Chapter 11 debtor’s assets at a bankruptcy court sale barred any later recovery from the debtor’s guarantors. In re Spillman Development Group, Ltd., ___ F.3d ___, 2013WL 757648 (5th Cir. 2/28/13). A “credit bid” allows a creditor to “offset its [undisputed] claim against the purchase price,” a right explicitly granted by Bankruptcy Code (“Code”) § 363(k). 3 Collier, Bankruptcy, ¶ 363.06[10], at 363-59 (16th rev. ed. 2010).

    Filed under:
    USA, Insolvency & Restructuring, Litigation, Schulte Roth & Zabel LLP, Surety, Debtor, Tortious interference, Secured loan, United States bankruptcy court, Fifth Circuit
    Authors:
    Adam C. Harris , Lawrence V. Gelber , Michael L. Cook
    Location:
    USA
    Firm:
    Schulte Roth & Zabel LLP
    Fifth Circuit Rejects Breach of Fiduciary Duty and Fraudulent Transfer Claims
    2018-03-31

    Fifth Circuit Rejects Breach of Fiduciary Duty and Fraudulent Transfer Claims

    By Michael L. Cook*

    Filed under:
    USA, Delaware, Company & Commercial, Insolvency & Restructuring, Litigation, Schulte Roth & Zabel LLP, Bankruptcy, Fiduciary, Fifth Circuit
    Location:
    USA
    Firm:
    Schulte Roth & Zabel LLP
    Fifth Circuit holds that political contributions from Ponzi schemers are fraudulent transfers
    2012-11-29

    The United States Court of Appeals for the Fifth Circuit, on Oct. 22, 2012, held that $1.6 million in political contributions made to five different political committees by Ponzi scheme defendants between 2000 and 2008 were fraudulent transfers made “with actual intent to hinder, delay, or defraud creditors” under the Texas version of the Uniform Fraudulent Transfer Act. Janvey v. Democratic Senatorial Campaign Committee, Inc., et al., 2012 WL 5207460 ___ F.3d ___ (5th Cir. 2012).

    Filed under:
    USA, Texas, Insolvency & Restructuring, Litigation, White Collar Crime, Schulte Roth & Zabel LLP, Fraud, Wells Fargo, Second Circuit, Fifth Circuit
    Authors:
    Michael L. Cook
    Location:
    USA
    Firm:
    Schulte Roth & Zabel LLP
    Fifth Circuit Rejects Breach of Fiduciary Duty and Fraudulent Transfer Claims
    2017-11-27

    “Officers and directors of [an operating corporate debtor] have fiduciary duties to the corporation — not the corporation’s creditors” under Texas law, held the U.S. Court of Appeals for the Fifth Circuit on Oct. 27, 2017. In re ATP Oil & Gas Corp., 2017 U.S. App. LEXIS 21337, *7 (5th Cir. Oct. 27, 2017). In affirming the district court’s dismissal of a Chapter 7 bankruptcy trustee’s complaint, the Fifth Circuit rejected the trustee’s breach of fiduciary claims against officers and directors for permitting “the payment of . . .

    Filed under:
    USA, Delaware, Insolvency & Restructuring, Litigation, Schulte Roth & Zabel LLP, Fiduciary, Fifth Circuit
    Authors:
    Michael L. Cook
    Location:
    USA
    Firm:
    Schulte Roth & Zabel LLP

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