In re Leslie Controls, Inc., No. 10-12199 (Bankr. D. Del. Sept. 21, 2010), involved a very common scenario. A company in financial difficulty sought to negotiate a consensual restructuring with an ad hoc committee and, in that context, disclosed various confidential analyses. In this particular case, the company had asbestos exposure, the ad hoc committee represented asbestos plaintiffs, and the shared information included a memorandum and numerous e-mails concerning potential insurance recoveries under various bankruptcy scenarios.
A discovery dispute gave the bankruptcy court an opportunity to rule on the common interest privilege which, the court said, has completely replaced the joint defense privilege for information sharing among clients with different attorneys, citing In re Teleglobe Communications Corp., 493 F.3d 345, 364 n. 20 (3d Cir. 2007). Leslie Controls, Inc., Case No. 10-12199 (Bankr. D. Del. 9/21/10)(Sontchi, B.J.).
Full text of the Court's opinion
In a 7-0 decision, the Ohio Supreme Court in Hudson v. Petrosurance, Inc., Slip Opinion No. 2010-Ohio-4505, held that the Ohio's Liquidation Act does not authorize the Superintendent of Insurance to pay interest to an insurer’s creditors and other preferred claimants on allowed claims before paying the funds remaining in the insolvent estate to the insurer's shareholders.
Perhaps prompted by revelations that one or more Connecticut-based insurers failed to notify individuals or report known data security incidents or breaches until weeks, or even months, after the data had been lost or stolen, the state's Insurance Commissioner has issued stringent new reporting obligations applicable to all entities regulated by the Connecticut Department of Insurance (CDI), including, for example, insurers, agents, brokers, adjusters, health maintenance organizations, preferred provider networks, discount health plans and certain consultants and utilization review companie
On October 8, 2010, the FDIC approved a Proposed Rule that would implement certain provisions of its authority granted by Congress in Title II of the Dodd-Frank Act (“Title II”) to act as receiver for covered financial companies (failing financial companies that pose significant risks to the financial stability of the United States) when a Bankruptcy Code proceeding is found to be inappropriate. Prior to the enactment of the Dodd‑Frank Act on July 21, 2010, no unified statutory scheme for the orderly liquidation of covered financial companies existed.
The FDIC has published a Notice of Proposed Rulemaking proposing rules for the implementation of the Dodd-Frank Act provisions providing that the FDIC may, as a receiver, “resolve” (i.e., liquidate) covered financial companies.
On November 1st, the Treasury Department provided an update regarding the federal government's involvement with AIG. AIG will use the proceeds from its sale of one unit and the IPO from a second to repay the loan extended to AIG by the Federal Reserve Bank of New York and to repurchase a substantial amount of the FRBNY's preferred interests in certain AIG subsidiaries. AIG will then draw up to $22 billion in remaining Troubled Asset Relief Program funds from the Treasury Department to restructure its governmental obligations.
Associated Community Bancorp, Inc. v. The Travelers Companies, Inc., 2010 U.S. Dist. LEXIS 34799 (D. Conn. Apr. 8, 2010)
Ambac Financial Group Inc., parent of the troubled Wisconsin-domiciled bond insurer Ambac Assurance Corp., filed for Chapter 11 bankruptcy relief on November 8, 2010. As was alluded to in our blog post last week, Ambac has been unable to raise additional capital or come to terms with its debt holders. Additionally, while Ambac had originally sought to enter bankruptcy as part of a prepackaged agreement, this too failed. Ambac’s bankruptcy filing comes amid a recent disclosure it made in a filing with the U.S.
The United States Supreme Court declined to review a Second Circuit decision wherein a bankruptcy trust fund established to reimburse asbestos victims while barring them from future lawsuits against insurers was held to not apply to Chubb Indemnity Insurance Co. In the underlying matter, Chubb sought contribution for asbestos injury claims from The Travelers Indemnity Co. The trust was established in 1986 by a bankruptcy court and funded with hundreds of millions of dollars from insurers for the benefit of asbestos claimants and their families.