The Bankruptcy Appellate Panel for the Sixth Circuit has issued an opinion protecting and preserving a bank’s security interest in funds in the debtor’s bank account notwithstanding the fact that the bank released those funds to the trustee. In re Cumberland Molded Products, LLC, No. 09-8049 (6th Cir. B.A.P. June 23, 2010).
Introduction
Recently, the Plan Administrator for the Goody's Family Clothing bankruptcy commenced adversary actions against various defendants in the United States Bankruptcy Court for the District of Delaware. The Goody's Plan Administrator was appointed pursuant to Goody's plan of reorganization. The Bankruptcy Court approved Goody's plan on October 7, 2008, approximately four months after the company filed for bankruptcy.
Goody's Second Bankruptcy Filing
In an interesting twist on a run-of-themill case regarding the personal liability of a corporate officer for unremitted sales taxes, the New York State Division of Tax Appeals held an owner (“Petitioner”) personally liable for sales tax even though the corporation was in Chapter 11 bankruptcy and was being run by a bankruptcy court-approved management company. In re Eugene Dinino, Docket Nos. 822605, 822606, 822607, 822608, 822609, 822610 (N.Y.S. Div. of Tax App. June 24, 2010).
IN RE: SOLIS (July 9, 2010)
Intercreditor agreements between first and second lien lenders are created all the time and are therefore not usually glitzy topics for client updates. But the recent intercreditor dispute between Donald Trump and corporate raider Carl Icahn over control of Trump's Atlantic City casinos had all the drama and glamour of the gambling dens and billionaires involved, including two competing but confirmable plans and senior and junior creditors vying for ownership of a gaming empire and its attendant upside.
In a significant development for financial institution directors and officers, the Federal Deposition Insurance Corporation (FDIC) has filed the first lawsuit in the current financial crisis against former officers of a closed financial institution arising from alleged loan losses to the bank. On July 2, 2010, the FDIC filed a complaint in federal court in California against former officers of the homebuilding division of IndyMac Bank for civil money damages. FDIC v. Van Dellen, Case No. 2:10-cv-04915-DSF-SH (C.D. Cal.) (July 2, 2010).
In pari delicto is a common law defense against liability in circumstances where the culpability of the plaintiff is at least as great as the culpability of the defendant. The Supreme Court of Pennsylvania clarified Pennsylvania law on this on February 16, 2010, in Official Comm. Of Unsecured Creditors of Allegheny Health, Educ. & Research Found. v.
Earlier this month, Bettina M Whyte, the SemGroup Litigation Trustee (the "Trustee") filed approximately 350 adversary actions against various creditors in the SemCrude bankruptcy. The majority of the adversary actions are preference actions under 11 U.S.C. section 547 of the United States Bankruptcy Code. Some of the adversary actions, however, allege defendants received fraudulent transfers from various SemCrude debtors (the "Debtors").
LLC members and other persons dealing with LLCs will be interested in a recent Florida Supreme Court case that was decided on June 24, 2010. The court’s decision in Olmstead v. FTC appears to eliminate part of the asset protection feature of single-member LLCs and calls into question the remedies available to creditors of members in multiple-member LLCs.
A federal judge has ruled that directors and officers of a company in bankruptcy proceedings may continue to access an eroding liability policy to cover their defense costs. The court based its decision on a close examination of the policy language, and alternatively held that the individual directors and officers had shown they were entitled to relief from the automatic stay. In re: Downey Financial Corp., No. 08-bk-13041 (CSS) (Bankr.D.Del. May 7, 2010).