Key Notes:

The enforcement of a lender’s claim for a make-whole premium in a chapter 11 case has created significant controversy among legal practitioners and the courts. Notably, the three circuit courts of appeal that have addressed make-whole claims, i.e. the Second, Third and Fifth Circuits, have issued conflicting decisions on the nature of these claims and their allowance under the Bankruptcy Code. In this post we provide a brief summary of make-whole premiums and address the controversy among the circuits.

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Law360

Reprinted with permission from Law360

In a Feb. 20, 2019, opinion in In re Titus,[1] the U.S. Court of Appeals for the Third Circuit, in an opinion authored by Judge Thomas Ambro, announced a new test for calculating damages in fraudulent transfer actions involving tenancy by the entireties transfers.

Facts

It will come as no surprise to avid readers of TCPAWorld.com that some folks may take offense to the tactics of Lash & Wilcox.

In a decision with sweeping consequences for equipment lessors, the bankruptcy court (SDNY) in Republic Airways held that a liquidated damages provision in a true lease is an unenforceable penalty if it provides for the unconditional transfer of residual value risk or market risk only upon default, without a cognizable connection to any anticipated harm caused by the default itself. Importantly for lessors and lenders alike, the bankruptcy court held that the unconditional guaranties of such obligations in favor of the lessor violated public policy and were unenforceable.

On February 25, 2019, the U.S. Court of Appeals for the Second Circuit vacated the bankruptcy court’s dismissal of avoidance actions brought by Irving Picard, the trustee (Trustee) for the liquidation of Bernard L.

U.S. courts have a long-standing tradition of recognizing or enforcing the laws and court rulings of other nations as an exercise of international "comity." Prior to the enactment of chapter 15 of the Bankruptcy Code in 2005, the procedure for obtaining comity from a U.S. court in cases involving a foreign bankruptcy or insolvency case was haphazard and unpredictable. A ruling recently handed down by the U.S. District Court for the Northern District of Illinois indicates that the enactment of chapter 15 was a game changer in this context. In Halo Creative & Design Ltd. v.

In Tanguy v. West (In re Davis), 2018 WL 4232063 (5th Cir. Sept. 5, 2018), the U.S. Court of Appeals for the Fifth Circuit revisited the circumstances under which section 363(m) of the Bankruptcy Code moots an appeal of a bankruptcy court’s order approving a sale of assets. The Fifth Circuit reaffirmed its adherence to the majority rule on the issue, ruling that, absent evidence that the purchaser did not acquire the property in good faith, the challengers’ failure to obtain a stay pending appeal moots any appeal of a sale order.

Rumors of another recession multiplied as the tumultuous second year of the Trump administration came to a close. Highlights of 2018 included a simmering trade war with China; political upheaval after the House of Representatives was retaken by Democrats in the midterm elections; mayhem in financial markets; and, in December, the beginning of the longest government shutdown in U.S. history, triggered by lawmakers’ refusal to provide $5.7 billion in funding for a U.S.-Mexican border wall.