On April 27, 2011, the United States Supreme Court approved certain amendments to Bankruptcy Rule 2019 requiring disclosures by certain creditors and equity holders in Chapter 11 cases. We expect that amended Rule 20191 (“Amended Rule 2019”) will take effect as a matter of law on December 1, 2011 unless in the interim Congress enacts legislation to reject, modify, or defer the rules, which we view as unlikely.
Anyone in the commercial real estate business can tell you that the past couple of years have seen a significant uptick in the number of commercial foreclosures and owner bankruptcies. While it does appear that the market is improving, we’re certainly not out of the woods. We are likely to see headlines declaring the latest big bankruptcy or foreclosure for a few more quarters. Sometimes lost in the headlines is the impact such issues have on the tenants in these commercial properties.
We've all heard of Chapter 7 and Chapter 11 of the Bankruptcy Code, but what is Chapter 9? Chapter 9 provides a municipality protection from its creditors while it develops a plan to resolve or adjust its debts. Adjustment of a municipality's debt involves refinancing such debts to (i) extend the time to pay debt obligations or (ii) reduce the amount of interest on such obligations.
Plaintiff White Mountains Re, successor in interest to MONY Re, filed an action in the New York Supreme Court against Travelers asserting claims for declaratory judgment and breach of contract arising out of a dispute concerning certain reinsurance contracts. Travelers removed the action to the US District Court for the Southern District of New York and subsequently filed a motion to transfer this action to the District of Connecticut.
In a decision that clarifies the rights of secured lenders to rents generated by a mortgaged property under New York law, a bankruptcy court in the Southern District of New York has held that rents which were assigned pre-petition pursuant to an assignment of rents executed in connection with a mortgage loan do not belong to the bankruptcy estate because the Lender took sufficient affirmative actions to perfect its rights over the rents.1
In a recent decision, the Bankruptcy Court for the Southern District of New York concluded that an investor in a Real Estate Mortgage Investment Conduit ("REMIC") lacked standing to object to the sale of a chapter 11 debtor's real property, despite that the property served as collateral for loans held in trust by the REMIC for the benefit of its investors.
In order to identify the appropriate cramdown rate of interest which allows a secured creditor to receive the “present value” of its claim through a stream of payments proposed in a plan, such analysis must necessarily begin with the Supreme Court’s plurality opinion in Till v. SCS Credit Corp., 541 U.S. 465 (2004).
Over the past five years, courts have issued rulings of potential concern to buyers of distressed debt. Courts have addressed, among other things, “loan to own” acquisition strategies resulting in vote designation; equitable subordination, disallowance, and other lender liability exposure based upon the claim seller’s misconduct; disclosure requirements for ad hoc committees of debtholders; the adequacy of standardized claims-trading agreements; and claim-filing requirements in the era of computerized records.
UNITED STATES OF AMERICA v. ROGAN (May 12, 2011)
Last month, the United States Court of Appeals in two separate circuits held that liability insurers have standing as parties in interest to appear and be heard in an insured's Chapter 11 case where the insurer might be liable to indemnify the claims of the insured's creditors.