In Whirlpool Corp. v. Wells Fargo Bank, National Association (In re hhgregg, Inc.), (7th Cir. Feb. 11. 2020), the United States Court of Appeals for the Seventh Circuit held that the current enactment of the United States Bankruptcy Code (the “Bankruptcy Code”), specifically 11 U.S.C. §546(c), expressly subordinates a seller’s reclamation claim to the prior rights of a lienholder. This is good news for secured lenders.
On December 20, 2019, Congress passed the Setting Every Community Up for Retirement Enhancement Act (the "SECURE Act"), which codifies sweeping changes to rules governing distributions from your qualified retirement plan (such as a 401(k)) or IRA (together referred to as "retirement accounts"). The SECURE Act, which became effective on January 1, 2020, affects not only distributions during your lifetime, but also the way in which your retirement assets are distributed to your beneficiaries after your death.
Hogan Lovells Publications | 17 February 2020
"The Net Short": U.S. and European High-Yield Covenant Trends in Response to Net Short Activism
Key Notes:
The U.S. Court of Appeals for the Ninth Circuit recently affirmed the dismissal of a consumer’s Truth in Lending Act (TILA) claim for lack of subject matter jurisdiction, holding that the claim was barred by the jurisdiction-stripping provision of the federal Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).
A copy of the opinion in Shaw v. Bank of America is available at: Link to Opinion.
A creditor’s “later-in-time reclamation demand is ‘subject to’ [a lender’s] prior rights as a secured creditor,” held the U.S. Court of Appeals for the Seventh Circuit on Feb. 11, 2020. In re HHGregg, Inc., 2020 WL 628268 (7th Cir. Feb. 11, 2020). And “[w]hen a lender insists on collateral, it expects the collateral to be worth something,” said the U.S. Court of Appeals for the Third Circuit on Feb. 11, 2020, when rejecting a guarantor’s “novel reading” of his security agreement. In re Somerset Regional Water Resources, LLC, 2020 WL 628542 (3d Cir. Feb. 11, 2020).
The Bottom Line
The United States Supreme Court recently issued a unanimous decision in Ritzen Group, Inc. v. Jackson Masonry, LLC, No. 19-938 589 U.S. __ (2020), which held that a bankruptcy court’s unreserved denial of a motion for relief from the automatic stay is a final, immediately appealable order within the meaning of 28 U.S.C. 158.
What Happened
California law allows a commercial lender to recover default interest from a borrower under certain circumstances. Separately, bankruptcy law permits a secured creditor with a lien on collateral valued more than the debt to recover its default interest from the bankruptcy estate. Both state and federal law mandate that the default rate of interest should not be a penalty. However, these principles do not address what happens when the borrower or bankruptcy trustee objects to a lender’s recovery of its default interest on the grounds that such interest constitutes an unenforceable penalty.
Last summer, my colleague C.J. Summers and I posted a report about Saccameno v. U.S. Bank National Association, a Seventh Circuit case in which we had filed an amicus brief on behalf of the Chamber of Commerce of the United States.
Introduction
As society’s technology continues to grow more and more complex, bankruptcy attorneys find themselves on the front lines of an ever-evolving legal practice. One such emerging technology, cryptocurrency, has only just begun to become a new thorn in the sides of bankruptcy attorneys and requires their increased attention.
What is Cryptocurrency?