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 September 15, 2010, the House Subcommittee on Commercial and Administrative Law voted 8-4 to report H.R. 4677 to the full House Judiciary Committee. Called the “Protecting Employees and Retirees in Business Bankruptcies Act of 2010,” H.R. 4677 contains several substantial changes to federal law aimed at preserving workers’ wages and benefits during a Chapter 11 bankruptcy proceeding. The subcommittee members voted along party lines, indicating that the bill will have a difficult fight in the full committee – its fate may ultimately depend on the result of the recent election.

Associated Community Bancorp, Inc. v. The Travelers Companies, Inc., 2010 U.S. Dist. LEXIS 34799 (D. Conn. Apr. 8, 2010)

In the jargon of the secondary bank loan market, loans beneficially owned by participation may be "elevated" to direct assignments once requisite administrative agent and/or borrower consent is obtained. Such "elevations" customarily have been viewed as straightforward transactions -- when completed, the participant simply stands in the shoes of the grantor and becomes the lender of record of the loan on the books of the administrative agent.

The current economic climate has led to an increasing number of bankruptcy filings. This article summarizes some important strategic considerations and initial steps that can be taken upon learning of such a filing by your customer or vendor in order to help minimize risks while maximizing your potential return in the bankruptcy.

Prompt Action and Verification of Bankruptcy

Introduction

As we first covered here, Ambac Financial Group Inc., the parent of the ailing Wisconsin-domiciled bond insurer Ambac Assurance Corp., filed for Chapter 11 bankruptcy relief with United States Bankruptcy Court for the Southern District of New York on November 8, 2010.

In November, Jeoffrey Burtch, the Chapter 7 Trustee in the AE Liquidation bankruptcy (formerly "Eclipse Aviation"), began filing preference actions against various creditors of Eclipse. Eclipse Aviation began as a New Mexico manufacturer of small jet aircraft. The company filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on November 25, 2008.

Years ago, second lien lenders adhered to the truism about children -- they were seen but not heard. As our children have grown more vocal in recent years, so too have second lien lenders. A spate of recent bankruptcy cases demonstrate that second lien lenders have been both seen and heard at many critical junctures in the chapter 11 timeline -- at the sale of the debtor’s assets under section 363 of the Bankruptcy Code,1 in seeking the appointment of an examiner,2 when voting on a chapter 11 plan,3 and in connection with the confirmation hearing.4