(6th Cir. B.A.P. April 17, 2017)

An important aspect of the Puerto Rico Oversight, Management, and Economic Stability Act, 48 U.S.C. §§ 2101–2241 ("PROMESA")—the temporary stay of creditor collection efforts that came into effect upon its enactment—was the subject of a ruling handed down by the U.S. Court of Appeals for the First Circuit. In Peaje Investments LLC v. García-Padilla, 845 F.3d 505 (1st Cir. 2017), the First Circuit affirmed in part and vacated in part a lower court order denying two motions for relief from the PROMESA stay.

ASARCO Standard

When the real estate market and financial markets tumbled during 2007-2008, the fallout was felt by financial institutions from large multi-billion dollar banks to small Community Banks. As these banks struggled to stay alive, a trend emerged for bank holding companies to market and sell a distressed bank through Section 363 of the Bankruptcy Code. This alternative was utilized in many instances as opposed to a traditional “reorganization plan” or takeover by the FDIC.

The Supreme Court of Indiana recently confirmed a mortgagee’s ability to seek an in rem judgment against property for which there was an outstanding lien balance after the borrowers obtained a discharge of their Chapter 7 bankruptcy.

In so ruling, the Court distinguished the difference between an in rem and in personam judgment, and rejected the borrowers’ unsupported argument that the debt was paid in full by the time the mortgagee initiated foreclosure proceedings against the borrowers.

As we have noted in another post, Non-Final Finality: Does One Interlocutory Issue Resolved in a Bankruptcy Court Order Render All Issues Addressed in the Order Non-Appealable?, not all orders in bankruptcy cases are immediately appealable as a matter of right. Only those orders deemed sufficiently “final” may be appealed without additional court authorization.

Status: Upcoming/New Filing

Acquirer: Capgemini America, Inc. (France)

Acquired: Ciber, Inc. (U.S.)

Value: Approx. US$50 million

Industry: Information Technology

(Bankr. E.D. Ky. Apr. 10, 2017)

The bankruptcy court grants in part and denies in part the defendant lender’s motion to compel arbitration of claims asserted in the debtor’s complaint. The court first finds that the arbitration agreement is valid and that the claims are within its scope. The court then holds that, for certain claims, arbitration would conflict with the underlying purposes of the bankruptcy code. Thus, those claims remain with the bankruptcy court, while the other claims are to be arbitrated. Opinion below.

Judge: Wise

In 2015, Distressing Matters reported on the Third Circuit’s decision in In re Jevic Holding Corp., wherein that panel ruled that, in rare circumstances, bankruptcy courts may approve the distribution of settlement proceeds in a manner that violates the Bankruptcy Code’s statutory priority scheme.

On March 9, 2017, a bankruptcy court in New York became the latest to weigh in on the developing circuit court split regarding whether modification of mortgages should be permitted under 11 U.S.C.