In recent weeks, a number of transactions have come across our desks involving levered feeders set up as an investment vehicle for insurance-related investors. For regulatory reasons, these vehicles are established such that each such investor’s commitment is comprised of both a loan commitment (the “Debt Commitment”) and an equity commitment (the “Equity Commitment”). This structure presents a challenge for lenders trying to balance the requested borrowing base treatment for investor commitments of this type against the potential bankruptcy implications that this structure poses.

“… [A]ny sale of [a foreign] debtor[’s] property [in the U.S.] outside of the ordinary course of business can be approved by the bankruptcy court only after notice, hearing, and a finding of good business reasons to permit the sale,” held the U.S. Court of Appeals for the Second Circuit on May 22, 2017. In re Fairfield Sentry Ltd. (“Sentry II”), 2017 U.S. App. LEXIS 8860, at *11 (2d Cir. May 22, 2017).

In a decision likely to affect thousands of Madoff investors, the Second Circuit Court of Appeals on Aug. 16, 2011 unanimously upheld the method used by the liquidating trustee for Bernard L.

The U.S. Court of Appeals for the Second Circuit, on July 9, 2007, decisively affirmed a bankruptcy court's dismissal of an equitable subordination complaint filed by a creditors' committee against eight investment fund lenders. Official Committee of Unsecured Creditors of Applied Theory Corporation v. Halifax Fund, L.P., et al. (In re Applied Theory Corporation), ___ F.3d ___, 2007 U.S. App. LEXIS 16180 (2d Cir. July 9, 2007).

A federal district court has ruled that a distressed debt fund is not a “financial institution” for purposes of the assignment provisions of a loan agreement.

Background

Today, Dubai World announced that it has presented a restructuring proposal to the Coordinating Committee representing its creditors on the restructuring of $23.5 billion of total financial liabilities of Dubai World as of December 31, 2009.

Today, the FDIC announced that Colony Capital Acquisitions, LLC paid a total of approximately $90.5 million (net of working capital) in cash for a 40% equity stake in a limited liability company (LLC) created by the FDIC to hold a portfolio of approximately 1,200 distressed commercial real estate loans with an aggregate unpaid principal balance of $1.02 billion arising out of 22 failed bank receiverships.

The Illinois Department of Financial and Professional Regulation, Division of Banking, closed InBank, headquartered in Oak Forest, Illinois, and the FDIC was named as receiver. The FDIC entered into a purchase and assumption agreement with MB Financial Bank, N.A., headquartered in Chicago, Illinois, to assume all the deposits of InBank except certain brokered deposits.

The Alabama State Banking Department closed CapitalSouth Bank, headquartered in Birmingham, Alabama, and the FDIC was named as receiver. As receiver, the FDIC entered into a purchase and assumption agreement with IBERIABANK, headquartered in Lafayette, Louisiana, to assume all the deposits of CapitalSouth Bank, except brokered deposits.

Today, Guaranty Bank, headquartered in Austin, Texas, was closed by theOTS and the FDIC was named as receiver.