TRANSACTIONAL
LITIGATION/CONTROVERSY
June 8, 2017
Bankruptcy Alert
Insolvency at Its Limits: What Management and Creditors of Insolvent LLCs and LPs Should Know About Fiduciary Duties Waivers and Standing, Inside and Outside of Bankruptcy
By Isley M. Gostin, Craig Goldblatt and George W. Shuster, Jr.
Delaware Sports Complex, LLC, which operates an 180 acre indoor and outdoor sports facility and the 190 acre St. Annes golf course in Middletown, Delaware, has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Case No. 17-11175).
Debt collectors scored a win on Monday when the United States Supreme Court ruled that pursuing stale debt is not a violation of the Fair Debt Collection Practices Act (“FDCPA”).
The case of Midland Funding LLC v Aleida Johnson addressed an ongoing issue for creditors, debt collectors and consumers. As debts age, and are often sold, there remains a question of how far collectors may go to pursue payment on the debt.
The current decline in oil prices, which continues to show no signs of a long-term reversal, is having unexpected and unwanted consequences, many of which may turn into long-lasting troubles for the oil and gas industry, especially for its investors.
In the decision of In re Metroplex on the Atlantic, LLC, 545 B.R. 786 (Bankr. E.D.N.Y. 2016), the United States Bankruptcy Court for the Eastern District of New York held that an easement is an in rem property interest, subject to sale free and clear under Bankruptcy Code section 363(f).
In Dubois v. Atlas Acquisitions LLC, Case No. 15-1945 (4th Cir. Aug. 25, 2016), the Fourth Circuit Court of Appeals held in a 2-1 decision that filing proofs of claim on time-barred debts does not violate the Fair Debt Collection Practices Act (“FDCPA”), at least where state law preserves the right to collect on the payment. In so holding, the court sided with the Second and Eighth Circuit Courts of Appeals in a circuit split regarding the viability of FDCPA claims premised on proofs of claim filed in a debtor’s bankruptcy case.
On August 24, 2016, Judge Mary F. Walrath of the Delaware Bankruptcy Court overruling an objection to claim for reclamation. The decision was issued in the Reichold Holdings US, Inc. Bankruptcy (Case No. 14-12237) in the Delaware Bankruptcy Court. A copy of the Opinion is available here.
Several recent cases in the United States District Court for the Southern District of New York have created ambiguity about when distressed exchange offers violate Section 316(b) of the 1939 Trust Indenture Act (the “TIA”). It appears that plaintiffs’ lawyers are using this ambiguity to challenge distressed exchange offers. The threat of litigation may give minority bondholders a powerful tool to hinder less than fully consensual out-of-court restructurings and provide them with increased leverage in negotiations.
In a new, unpublished decision1 in the U.S. Court of Appeals, the Fourth Circuit affirmed a bankruptcy court’s order re-characterizing a portion of a loan to a bankruptcy debtor purchased by a creditor as equity instead of debt, impairing that creditor’s ability to recover from the debtor.
On July 10, 2014, the United States Court of Appeals for the Eleventh Circuit issued its opinion in Crawford v. LVNV Funding, LLC. That opinion began by decrying the “deluge” of proofs of claim filed by debt buyers on debts that are unenforceable under state statutes of limitations.