On September 25, 2012, Judge D. Michael Lynn for the United States Bankruptcy Court of the Northern District of Texas held that a “tail provision” for professional fees rendered prepetition survived – and was not cut off by – the debtor’s bankruptcy filing.  In re Texas Rangers Baseball Partners, Case No. 10-43400-DML, 2012 WL 4464550 (Bankr. N.D. Tex. Sept. 25, 2012).

Background

On June 6, 2012, Bankruptcy Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved a $2.875 million key employee incentive plan (“KEIP”) in the Velo Holdings bankruptcy cases over the objection of the U.S. Trustee finding that it was primarily incentivizing and a sound exercise of the debtors’ business judgment.  Inre Velo Holdings Inc., Case No. 12-11384 (MG), 2012 Bankr. LEXIS 2535 (Bankr. S.D.N.Y. 2012).  The decision follows well-settled law in the Southern District and Delaware regarding approval of KEIPs.

On May 15, 2012, the Eleventh Circuit Court of Appeals upheld a ruling by the U.S. Bankruptcy Court for the Southern District of Florida, which required certain lenders to return $403 million in prepetition payments they had received from TOUSA, Inc.

The United States Bankruptcy Court for the District of Delaware recently dismissed equitable subordination and fraudulent transfer claims filed by the Official Committee of Unsecured Creditors of Champion Enterprises, Inc. ("Champion") against more than 100 prepetition lenders to Champion (collectively, the "Defendants")1.

A “roll-up” is a form of postpetition financing which has the effect of elevating the priority of prepetition debt. In a roll-up, the prepetition debt of the postpetition, new money lenders is rolled into the debtor in possession financing, thus affording the prepetition debt superpriority status and, in many circumstances, ensuring the rolled-up debt is paid in full on the effective date of the plan of reorganization, (unless the lender consents to different treatment under the plan).1

On Thursday, August 6, 2009, the United States Senate confirmed Justice Sonia Sotomayor to the Supreme Court of the United States. As a former Judge on the Court of Appeals for the Second Circuit, Judge Sotomayor’s jurisprudence includes a number of decisions involving noteworthy bankruptcy cases. This article provides a brief survey of these decisions.

Introduction

In Clear Channel Outdoor, Inc. v.Knupfer (In re PW, LLC),1 the United States Bankruptcy Appellate Panel for the Ninth Circuit (the “BAP”) addressed the issue of whether a secured creditor had purchased estate property free and clear of liens, claims and encumbrances outside of a plan of reorganization.

In a May 23, 2008 decision, the United States Bankruptcy Court for the District of Delaware ruled that BBB-rated mortgage-backed notes are eligible for the Bankruptcy Code's repurchase agreement safe harbor as “interests in mortgage loans”. The court also held that a repurchase agreement constituted a sale, as opposed to a financing governed by UCC Article 9 -- the first decision on this topic since the financial contract safe harbors were expanded under the 2005 amendments to the Bankruptcy Code.

January 8, 2008 A Delaware bankruptcy court decided on Friday that mortgage servicing rights could be severed from a mortgage loan repurchase agreement that fell within applicable safe harbors of the Bankruptcy Code, at least where the loans were transferred “servicing retained.” The decision isCalyon New York Branch v. American Home Mortgage Corp., et al. (In re American Home Mortgage Corp.), Bankr. Case No. 07-51704 (CSS) (Bankr. D. Del. Jan. 4, 2008).