The bankruptcy court overseeing the Lehman Brothers chapter 11 cases rejected efforts by Lehman Brothers Special Financing Inc. (LBSF) to recover roughly $1 billion in payments made to numerous noteholder defendants from the liquidation of collateral originally pledged to secure both obligations under notes issued by special purpose entities and credit default swap (CDS) obligations to LBSF, holding that the termination of the swap and liquidation and distribution of the collateral were protected by the Bankruptcy Code’s safe harbor.
In Re Appraisal Of DFC Global Corp., Consol. C.A. 10107-CB (July 8, 2016)
This decision deals with the always difficult world of what beta to use in a DCF valuation. The Court’s analysis is an exhaustive review of the alternative approaches and is particularly helpful in valuing a publicly traded company in some financial turmoil.
A lender’s (“Lender”) derivative breach of fiduciary duty claims on behalf of Chapter 7 guarantor-Debtors cannot be time-barred because of Lender’s knowledge of the “[d]efendants’ conduct,” held the U.S. District Court for the District of Delaware on June 22, 2016. In re AMC Investors, LLC, 2016 U.S. Dist. LEXIS 80861, *16 (Del. June 22, 2016).
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As we have discussed in prior blog posts, The Battle of the Student Loan Discharge, The Eternal Pursuit to Collect: Due Process Rights and Actions to Collect on a Debtor’s Defaulted Student Loans
Plenty of ink has been spilled about how to apply the U.S. Supreme Court’s decision in Stern v. Marshall and the line of cases in which it sits. It is a challenging body of law for many reasons, but perhaps the most difficult reason is that the Court indicated that the scope of power that bankruptcy courts may be given today must be defined by reference to beliefs about the scope of judicial and other governmental powers at the time of the country’s founding, when divisions of governmental power were embedded in the U.S. Constitution.
New York bankruptcy judge dismisses claims to recover approximately $1 billion that had been distributed to noteholders following commencement of the Lehman Brothers chapter 11 proceedings in September 2008.
Policyholders contemplating insurance coverage settlements with low-level insurers should use caution to preserve their ability to access higher-level excess policies. Excess insurers are increasingly disputing that underlying policies are properly exhausted where policyholders elect to settle with underlying insurers for less than full limits. The issue can be further complicated if the policyholder seeks protection under the bankruptcy laws against long-tail liabilities, as a recent case illustrates.
Illinois courts have long recognized that an insolvent corporation’s creditors have standing to bring a derivative action on behalf of the corporation against its officers and directors. On June 24, 2016, in a case of first impression in Illinois, the Illinois Appellate Court, First District, in Caulfield v. The Packer Group, Inc. held that shareholders have standing to pursue a shareholder derivative suit against an insolvent corporation.
We’ve all seen it. The business opportunity looks enticing but is laced with risk about a potential bankruptcy filing down the road. As bankruptcy lawyers we are often asked how deals can be structured to prevent a potential bankruptcy filing.