On January 19th, the FDIC announced that it will open a temporary satellite office in suburban Chicago to manage receiverships and to liquidate assets from failed financial institutions primarily located in Midwestern states. FDIC Press Release.

No Respite for Distressed Companies in Hong Kong

In Hong Kong, a company that is financially distressed may generally only avoid being liquidated or wound up if it:

In a recent holding that a creditor may collect, on an unsecured basis, post-petition attorneys’ fees under an otherwise enforceable pre-petition contract, the Second Circuit Court of Appeals followed a similar ruling by the Ninth Circuit earlier this year, adding to a conflict among the circuits on this issue.

On June 10th, the FDIC published the final rule establishing the criteria for determining if a company is predominantly engaged in "activities that are financial in nature or incidental thereto" for purposes of Title II of the Dodd-Frank Act and therefore subject to the FDIC's orderly liquidation authority.

• Approximately 5,000 Bakery Confectionery Tobacco and Grain Millers Union (BCTGM) members across the country struck Hostess Brands, Inc., to protest the company’s imposition of its last, best, and final contract. That contract, which provided for an 8% wage cut and a 17% reduction in health and welfare benefits, was rejected by BCTGM members in September, but ratified by some 7,500 Hostess employees represented by the Teamsters. In October, Hostess received federal bankruptcy court approval to impose the contract.

On March 15, 2012, the American Bar Association’s Electronic Discovery (ESI) in Bankruptcy Working Group (the “Working Group”) published an interim report addressing certain principles and suggested best practices for electronic discovery in bankruptcy cases (the “Interim Report”). The Working Group was formed to study and prepare guidelines or a “best practices” report on the scope and timing of a party’s obligation to preserve ESI in bankruptcy cases.

On June 28th, the Bankruptcy Court overseeing the liquidation of Bernard Madoff's broker-dealer ruled that investors in funds that in turn invested with Madoff are not claimants within the meaning of the Securities Investor Protection Act. SIPC v. Bernard L. Madoff Investment Securities LLC. See also Reuters.

On April 18th, the FDIC released a report examining how it could have structured an orderly resolution of Lehman Brothers Holdings Inc. under the orderly liquidation authority of the Dodd-Frank Act had that law been in effect at the time.

FDIC Proposes Rules for the Recoupment of Compensation from Executives of Failed Financial Institutions I hope this does not apply to any of you, but on Tuesday, the Board of Directors of the Federal Deposit Insurance Corporation (FDIC) approved a Notice of Proposed Rulemaking (NPR) to clarify application of the orderly liquidation authority contained in Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act, "Orderly Liquidation Authority" (OLA).

On February 22nd, the Bankruptcy Court overseeing the liquidation of Lehman Brothers' broker-dealer business denied motions seeking to modify the order approving the sale of the business to Barclays Capital. The Court noted the extraordinary circumstances surrounding the sale, the affirmance of that sale order, and movants' failure to challenge the order for one year. The court held that even if the evidence presented here were known in 2008, the result would have been the same, i.e., the sale would have been approved.