In Husky Int’l Electronics, Inc. v. Ritz, No. 15-145 (U.S. May 16, 2016), a 7-1 majority of the Supreme Court held that a fraudulent conveyance scheme comported with the requirements of “actual fraud” to create a potential new debt dischargeability exception pursuant to section 523(a)(2)(A) of the Bankruptcy Code.
On Monday, May 16, 2016, the Supreme Court issued its decision in the case of Husky Int’l Elecs., Inc. v. Ritz, — S. Ct. —, 2016 WL 2842452 (2016) resolving a split between the Fifth and Seventh Circuit Courts of Appeal regarding the scope of the “actual fraud” exception to an individual debtor’s bankruptcy discharge. In relevant part, Section 523(a)(2)(A) of the Bankruptcy Code prohibits debtors from discharging “any debt . . . for money, property, [or] services . . . to the extent obtained, by . . .
An individual files a bankruptcy case to have his debts forgiven, or “discharged.” Where that individual is a principal shareholder or officer of a corporate borrower who has guaranteed payment of his company’s loans, those debts can be substantial. An individual guarantor in that dire situation may try to hide assets – his own or those of his company – and then file a bankruptcy case, in an effort to defeat a lender’s right to be repaid.
This is the final installment in a three-part series on letters of credit by attorneys in Fox Rothschild’s Financial Restructuring & Bankruptcy Practice. Part I focused on the advantages of letters of credit as a credit enhancement tool.
Recently, the Bankruptcy Court for the Southern District of New York issued an opinion in In re Sabine Oil & Gas Corp.1 that permitted the debtor, Sabine Oil & Gas Corporation (“Sabine”) to reject certain gathering and condensation agreements as executory contracts under 11 U.S.C. § 365. Because the midstream service sector finances the construction of pipelines, the costs of which are recovered over the life of gathering agreements, the Court’s decision has the potential to lead to considerable upheaval in the energy sector.
The Ninth Circuit BAP recently discussed on appeal the issue of whether a bankruptcy court may use the “fair and equitable” standard for confirmation in § 1129(b) to deny an oversecured creditor default interest on its claim to which it would otherwise be entitled under § 506(b). In Wells Fargo Bank, N.A. v. Beltway One Development Group, LLC (In re Beltway One Development Group, LLC), 547 B.R. 819 (9th Cir.
That intriguing little tech company in which you invested has just filed bankruptcy. Will you ever be able to recover any of that investment? Maybe. It depends upon the form of your investment. And because recoveries depend upon the form of the investment, you may want to consider how you document your investments in the future.
On May 16, 2016, the U.S. Supreme Court decided Husky International Electronics, Inc. v. Ritz, No. 15-145, holding that the "actual fraud" bar to discharge under section 523(a)(2)(A) of the Bankruptcy Code encompasses an individual debtor's knowing receipt of fraudulently transferred property.
Statutory Background
The Supreme Court’s Decision:
CentsAbility: Creditors' Rights Law Update
In a recent case from the Business Court in Brunswick County, a North Carolina Judge held that Defendants could assert a claim for breach of the duty to negotiate in good faith finding that negotiations for a loan modification and renewal gave rise to a genuine issue of material fact as to whether the parties had entered into a “binding preliminary agreement.” RREF BB Acquisitions v. MAS Properties, LLC, No. 13 CVS 193, 2015 NCBC 58, 2015 WL 3646992 (N.C. Super. Ct. June 9, 2015).