Bond indentures and loan agreements often include make-whole provisions to provide protection to lenders and investors in the event of debt repayment prior to maturity. Make-whole provisions work to compensate the investor/lender for any future interest lost when the issuer/borrower repays the note prior to a specific date.
Following the commencement of an involuntary proceeding against the company by certain creditors in Illinois, Central Grocers, Inc., a retail food cooperative and distributor founded in 1917, and 11 of its affiliates, has filed for chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware (Lead Case No. 17-10993 BLS). The petition lists between $100 million and $500 million in both assets and liabilities.
Practitioners Beware: When a client located in the state in which you practice law is served with a subpoena from a federal court located in another state, only the relevant federal court in your state (whether district or bankruptcy court) can adjudicate a motion to quash or otherwise modify the subpoena. A recent decision from a Colorado bankruptcy court, In re SBN Fog Cap II, LLC, 562 B.R. 771 (Bankr. D. Colo.
On May 2, 2017, the Sixth Circuit Court of Appeals clarified whether a bankruptcy debtor retains any property rights in rents after defaulting on a loan that includes an assignment of rents.
David Conaway [email protected] 704.945.2149 Manufacturing Customers Vendors Supply Chain Insolvency Litigation Commercial and Financial Contracts Cross-Border
BACKGROUND
Searchmetrics, Inc., a search engine optimization services company based in San Mateo, CA, has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Case No. 17-11032-CSS). The Petition estimates Searchmetric’s assets between $1–$10 million and its liabilities between $10-$50 million.
The U.S. Court of Appeals for the Eleventh Circuit recently affirmed the dismissal of a mortgage loan borrower’s federal Fair Debt Collection Practices Act and related state law claims because the defendant mortgagee was not a “debt collector” as defined by the FDCPA.
In so ruling, the Court also rejected the borrower’s allegations that the monthly statements the mortgagee sent to the borrower after her bankruptcy discharge were impermissible implied assertions of a right to collect against her personally.
Merit Management Group, LP v. FTI Consulting, Inc., No. 16-784
Section 546(e) of the Bankruptcy Code, 11 U.S.C. § 546(e), protects certain prepetition payouts by or to financial institutions from clawback by the trustee of the ensuing bankruptcy estate. In particular, the safe harbor protects transfers made by a debtor by or to a broker, financial institution, or similar intermediary in connection with a “securities contract,” unless the transfer was made with actual intent to hinder, delay, or defraud creditors.
MICHIGAN
milawyersweekly.com
Vol. 31, No. 26 May 1, 2017
$8.50 per copy
From a doodle to the Grand Bargain
How the bankruptcy in Detroit was resolved through mediation
By Hon. Steven W. Rhodes, Retired Chief Judge, U.S. Bankruptcy Court for the Eastern District of Michigan and Hon. Gerald E. Rosen, Retired Chief Judge, U.S. District Court for the Eastern District of Michigan
(6th Cir. May 2, 2017)
The Sixth Circuit reverses the bankruptcy court, finding that the assignment of rents acted as a complete transfer of ownership and the assignor did not retain any interest in the rents. The court analyzes Michigan law on such assignments and concludes that because the debtor/assignor had no rights in the rents assigned, they were not property of the bankruptcy estate. Opinion below.
Judge: Stranch
Attorney for Appellant: Robert N. Bassel
Attorney for Appellee: Jeremy S. Friedberg