As the automotive industry continues to restructure, whether through self-liquidation or government intervention, suppliers will inevitably be confronted with many of the same issues prevalent 4-5 years ago, including a supplier’s obligation to continue to provide goods post-petition and the supplier’s rights to adequate assurance as a condition to such shipment.
Reliance Insurance Company, which had consented to the entry of an Order of Rehabilitation by the Commonwealth Court of Pennsylvania on May 29, 2001, and which was ordered by the court into liquidation on October 3, 2001, reached a Commutation, Settlement Agreement, and Release with its reinsurer, Munich Reinsurance America. The Settlement Agreement is dated December 29, 2008.
C.A. No. 3989-CC (Del. Ch. Sept. 3, 2009)
Earlier this year, Courts from the Bankruptcy Courts for the Southern District of New York to the United States Supreme Court issued a number of rulings approving the asset sales by Chrysler and General Motors. Although popular and industry media have been replete with stories regarding the facts of these cases, this article provides an in-depth analysis of the Courts’ rulings on several key issues of interest to debtors and creditors in future bankruptcies.
Summary of Key Rulings
On September 17, 2009, the U.S.
The United States Bankruptcy Court for the Southern District of New York entered an order on Sept. 17, 2009, granting a motion filed by Lehman Brothers Special Financing Inc. (“LBSF”) to compel Metavante Corporation (“Metavante”) to continue to make payments to LBSF under an ISDA Master Agreement.
In a significant decision recently handed down in the Lehman bankruptcy case, the United States Bankruptcy Court for the Southern District of New York held that a non-defaulting counterparty acted improperly by suspending payments under an open derivative contract with Lehman Brothers Special Financing Inc. ("LBSF").
The Bankruptcy Abuse and Consumer Protection Act of 2005 (BAPCPA) purported to eliminate the ability of chapter 11 debtors in possession to pay bonuses to management through Key Employee Retention Plans. However, in recognition of the fact that a real need often exists to incentivize key employees to remain with a reorganizing or liquidating business, bankruptcy courts have approved incentive plans providing for payments to insiders and other employees. Such plans must be carefully crafted to avoid the restrictions on retention bonuses post-BAPCPA.
Introduction
The dearth of credit available for companies in financial distress means an asset sale may be the only way to save the business and jobs. It also presents unusually attractive investment opportunities for public and private companies, private equity and hedge funds, and other investors with capital and an ability to move expeditiously.
The limited liability company is widely used as the business entity of choice for a number of reasons, including its asset protection benefits. If a creditor of an LLC member attempts to seize the LLC member's interest (or the assets of the LLC for that matter), the creditor will have to deal with the charging order roadblock.