Global Insolvency | Daily News Headlines on Insolvency Developments across the Globe

Split in courts continues—private stock purchase payments not protected by Section 546 safe harbor

2011-09-14

Geltzer v. Mooney (In re MacMenamin’s Grill Ltd.), Adv. Case. No. 09-8266, Bankr. Case No. 08-23660, 2011 WL 1549056 (Bankr. S.D.N.Y. Apr. 21, 2011)

CASE SNAPSHOT

Filed under:

USA, New York, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Shareholder, Debtor, Security (finance), Fraud, Safe harbor (law), Writ, Leveraged buyout, Systemic risk, Secured loan, Title 11 of the US Code, Trustee, United States bankruptcy court

Authors:

Brian M. Schenker

Location:

USA

Firm:

Reed Smith LLP

Credit swap agreement ipso facto clause struck

2011-09-14

Lehman Brothers Special Financing, Inc. v. Ballyrock ABS-CDO 2007-1 Limited (In re Lehman Brothers Holdings, Inc.) No. 09-01032 (JMP) (Bankr. S.D.N.Y. May 12, 2011)

CASE SNAPSHOT

Filed under:

USA, New York, Derivatives, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Surety, Debtor, Injunction, Swap (finance), Liquidation, Asset forfeiture, Default (finance), Collateralized debt obligation, Mortgage-backed security, Right to property, Lehman Brothers, US District Court for the Southern District of New York

Authors:

Location:

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2011-09-14

We all know that many large commercial real estate loan transactions include “bad boy” guaranties from the principals of the borrower which spring into action upon the occurrence of certain events, like the filing of a bankruptcy petition. Some borrowers do not take these guaranties seriously since they think that they are in violation of public policy and/or constitute an unenforceable penalty.

Filed under:

USA, New York, Insolvency & Restructuring, Litigation, Reed Smith LLP, Conflict of interest, Shareholder, Surety, Debtor, Commercial property, Fiduciary, Interest, Mortgage loan, Bank of America

Authors:

Peter S. Clark, II

Location:

USA

Firm:

Reed Smith LLP

Reinsurer precluded from interposing early defenses in liquidation claims process

2011-09-14

Everest Reinsurance Company intervened in the liquidation proceedings of Midland Insurance Company, and moved to have the anti-suit injunction vacated, in order to allow it to participate in the claims settlement process, and to interpose defenses. The trial court denied the motion, and Everest appealed. The appellate court affirmed, finding Everest’s defenses were premature, as none of the relevant claims had yet been approved, and because adequate procedures existed for it to interpose defenses later in the process.

Filed under:

USA, Insolvency & Restructuring, Insurance, Litigation, Jorden Burt LLP, Injunction, Mobile app, Vacated judgment, Reinsurance, Liquidation, Liquidator (law), Anti-suit injunction

Authors:

John Pitblado

Location:

USA

Firm:

Jorden Burt LLP

Parent company’s motion to dismiss claim of breach of fiduciary duty denied

2011-09-14

In re Tronox Incorporated, et al., 2011 WL 1815149 (Bankr. S.D.N.Y. May 11, 2011)

CASE SNAPSHOT

Filed under:

USA, New York, Corporate Finance/M&A, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bond (finance), Environmental remediation, Shareholder, Breach of contract, Fiduciary, Debt, Liability (financial accounting), Holding company, Initial public offerings, Subsidiary, Conspiracy (civil), Parent company, US District Court for the Southern District of New York

Authors:

Ann E. Pille

Location:

USA

Firm:

Reed Smith LLP

Newpage - a good old fashioned free-fall Chapter 11 case

2011-09-16

Last week’s Chapter 11 filing by NewPage Corporation, a company with assets and liabilities in the billions of dollars, stands as a relative rarity in the current restructuring environment.

Filed under:

USA, Insolvency & Restructuring, Litigation, Kelley Drye & Warren LLP, Bankruptcy, Trade union, Hedge funds, Debt, Liability (financial accounting), Collective bargaining agreements, Balance sheet, Debtor in possession, Distressed securities, Bénéfice, US Environmental Protection Agency, Pension Benefit Guaranty Corporation

Authors:

Benjamin D. Feder

Location:

USA

Firm:

Kelley Drye & Warren LLP

Second Circuit adopts net investment method to determine net equity in Madoff bankruptcy case

2011-09-13

On August 16, 2011, the Second Circuit held that Irving H. Picard, the Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC ("Trustee"), utilized the correct methodology to determine the "net equity" of each Madoff investor under the Securities Investor Protection Act ("SIPA").

Location:

USA

Firm:

Seyfarth Shaw LLP

It's important to record the trustee's deed promptly after foreclosure

2011-09-13

The United States Bankruptcy Court for the Central District of California recently held that the filing of a bankruptcy petition by a borrower can void a trustee sale even where the petition is filed after the trustee sale, so long as the borrower files the petition before the execution of the trustee's deed upon sale. In re: Gonzales 2011 WL3328508 (Bkrtcy. C.D.Cal. August 1, 2011).

Location:

USA

Firm:

Jeffer Mangels Butler & Mitchell LLP

Enron’s prematurity redemptions of commercial paper are not avoidable in bankruptcy

2011-09-13

The U.S. Court of Appeals for the Second Circuit recently held that prematurity redemptions of commercial paper made by Enron Corp. shortly before it filed for bankruptcy were protected from avoidance by 11 U.S.C. § 546(e)’s safe harbor for securities transaction settlement payments. In re Enron Creditors Recovery Corp. v. Alfa., No. 09-5122-bk (2d Cir. June 28, 2011). In so doing, the Second Circuit resolved a clash between the Bankruptcy Code’s interest in avoiding preferential debt repayment and the securities industry’s interest in preserving transaction finality.