In a decision likely to affect thousands of Madoff investors, the Second Circuit Court of Appeals on Aug. 16, 2011 unanimously upheld the method used by the liquidating trustee for Bernard L.

The U.K. Court of Appeal (the “Court of Appeal”) on Aug. 2, 2010, handed down a long-awaited decision regarding an appeal related to the scope of, and eligibility to receive distributions from, the Lehman Brothers Europe (International) (“LBIE”) pool of client money. Lehman Bros. Int. (Europe) (In Administration) v CRC Credit Fund Ltd. & Ors, [2010] EWCA Civ 917 (appeal taken from the Chancery Division) (U.K.).

On July 14, 2009, the Joint Administrators of Lehman Brothers International (Europe) ("LBIE"), made an application to the High Court in London with respect to a Scheme of Arrangement (the "Scheme") (the UK administration’s analogue to a Chapter 11 plan of reorganization) designed to provide procedures to be used by LBIE for the purpose of returning so-called “trust property” held by LBIE to certain of its customers (“Creditors”). Among the primary purposes of the Scheme is the desire to avoid the need for a case-by-case resolution of the claims made by LBIE's Creditors.

The Court of Appeals for the First Circuit recently held that an oversecured lender holds at least an unsecured claim for contractual prepayment penalties against a solvent debtor. UPS Capital Business Credit v. Gencarelli (In re Gencarelli), 2007 BL 91656 (1st Cir., Aug. 30, 2007). As the court explained, "[t]his is a difficult question that has significant ramifications for the commercial lending industry." Id. at 16.

A “federal [fraudulent transfer claim under Bankruptcy Code § 548] is independent of [a] state-court [foreclosure] judgment,” held the U.S. Court of Appeals for the Sixth Circuit on Dec. 27, 2021. In reLowry, 2021 WL 6112972, *1 (6th Cir. Dec. 27, 2021). Reversing the lower courts’ approval of a Michigan tax foreclosure sale, the Sixth Circuit reasoned that “the amount paid on foreclosure bore no relation at all to the value of the property, thus precluding the … argument that the sale was for ‘a reasonably equivalent value’ under the rule of BFP v.

In a decision of first impression entered on June 3, 2020, a Chicago bankruptcy court (“Court”) held that a restaurant tenant was excused from paying a significant portion of its rent under the force majeure provisions of its lease because of the governor’s executive order prohibiting in-house dining during the COVID-19 pandemic.[1] This decision is highly significant for landlords and tenants whose ability to service their clients has similarly been restricted by government orders.

When a Chapter 11 debtor never sought “court approval to assume” an executory service contract, it “did not assume” the contract, held the U.S. District Court for the Eastern District of Virginia on June 28, 2019. In re Toys “R” Us, Inc., 2019 WL 271305, *1 (E.D. Va. June 28, 2019).

A purported conditional sale agreement “created a security interest rather than a lease,” held the U.S. Court of Appeals for the Fifth Circuit on Aug. 7, 2018. In re Pioneer Health Services Inc., 2018 WL 3747537, *3 (5th Cir. Aug. 7, 2018). Affirming the lower courts’ finding “that the relevant agreements were not ‘true leases,’” the court rejected a bank’s “motion to compel payment under [its] contract as an unexpired lease or an administrative expense.” Id., at *1. The economic substance, not the form of the transaction, was decisive.

The U.S. Court of Appeals for the Third Circuit recently dismissed an appeal from “the sale of legal claims” as “statutorily moot” under Bankruptcy Code (“Code”) § 363(m) because the appellants “had not obtained a stay” of the effectiveness of the sale order pending appeal. In re Pursuit Capital Mgmt., LLC, 2017 U.S. App. Lexis 20889 (3d Cir. Oct. 24, 2017). According to the court, “we cannot give [the appellants] the remedy they seek without affecting the validity of the sale.” Id., at *37.

Relevance

“[T]he price received at a California tax sale” properly held under state law “conclusively establishes ‘reasonably equivalent value’ for purposes of” the Bankruptcy Code’s (“Code”) fraudulent transfer section (§ 548(a)(1)), held the U.S. Court of Appeals for the Ninth Circuit on Sept. 8, 2016. In re Tracht Gut LLC, 2016 WL4698300, at *1 (9th Cir. Sept. 8, 2016). Affirming the lower courts, the Ninth Circuit reasoned that “California tax sales have the same procedural safeguards as the California mortgage foreclosure sale” approved by the U.S. Supreme Court in BFP v.