Reversing a decision by the Sixth Circuit Court of Appeals, the U.S. Supreme Court ruled unanimously that severance payments to employees who were involuntarily terminated as part of a Chapter 11 bankruptcy were taxable wages subject to Social Security and Medicare (FICA) taxes. The decision disappointed many who had hoped the court would uphold the earlier appeals court ruling that certain severance payments should be exempt from FICA taxes as supplemental unemployment compensation benefits (SUBs).
On April 17, 2014, the United States Bankruptcy Judge Sean H. Lane issued an opinion in the Waterford Wedgwood bankruptcy discussing at length one of the defenses available to preference defendants. The opinion turns upon the scope of “ordinary business terms,” the objective prong of the ordinary course of business defense.
Once might be considered an aberration. Is twice the new normal?
The District Court for the Southern District of New York in Lehman Brothers recently threw cold water on a growing body of cases that permit compensation of professional fees incurred by individual members of official committees of unsecured creditors.
As predicted, the court in Tokyo has ruled that Mt. Gox will be liquidated. An “Announcement of Commencement of Bankruptcy Proceedings” was posted overnight April 24 by the Japanese bankruptcy trustee Nobuaki Kobayashi on the Mt. Gox site to confirm that the company is officially in bankruptcy (liquidation) in Japan. The Announcement also includes a “Frequently Asked Questions” section to give a very high level overview of the liquidation process.
Debtors must provide known creditors with actual notice of a claims bar date if they want the bar date to apply to those creditors. Such was the holding in In re Majorca Isles Master Association, Inc., Case No. 12-19056-AJC, Dkt. No. 222 (Bankr. S.D. Fla. March 27, 2014), where the bankruptcy court stated that when both a debtor and a creditor are “guilty in the handling of a claim and the [d]ebtor is aware of the creditor’s claim, then a tie goes to the creditor[,]” and the creditor’s claim will be allowed.
Despite the absence of any provision in the Bankruptcy Code expressly authorizing the recharacterization of a debt claim to an equity interest, it generally is well-established that recharacterization is within the broad powers afforded a bankruptcy court under section 105(a) of the Bankruptcy Code and is necessary for the proper application of the Bankruptcy Code’s priority scheme.1 In a recharacterization analysis, a
bankruptcy court ignores the labels of a transaction, examines the facts, and determines whether a
Since reports last month that a grand bargain had been struck to provide an infusion of cash to the Detroit bankruptcy in exchange for conveying the artwork at the Detroit Institute of Arts back to the museum itself, it has been largely accepted that the deal would succeed. The deal would contribute $366 million from several foundations, $100 million from the DIA foundation, and $350 million from the State of Michigan. This air of inevitability is due in large part to the cards that Emergency Manager Kevyn Orr holds: unless Detroit wants to monetize or sell the DIA collection th
As is well known, the right to credit bid is the entitlement of a secured lender to bid the amount of its outstanding claims at the sale of its collateral. If the secured lender places the winning bid, no money is exchanged and the purchase price is offset against the existing claims. Credit bidding provides an important right to secured lenders in ensuring that their collateral is not sold for a depressed value. If a secured lender thinks its collateral is being sold too cheaply, it has the option of taking the collateral in exchange for some or all its claims.
“The Pen Is Mightier Than The Sword…And Verbal Communications During Company-Wide Employee Meetings.”