Two courts have added to the murky case law addressing a bankruptcy trustee’s ability to recover a debtor’s tuition payments for their children. In Geltzer v. Oberlin College, et al., 2018 WL 6333588 (Bankr. S.D.N.Y. Dec. 4, 2018), a New York Bankruptcy Judge permitted a trustee to claw back payments that parents made to their financially independent adult children for college-related costs. In Pergament v. Brooklyn Law School, et al., 2018 WL 6182502 (E.D.N.Y. Nov.
THE BANKING LAW JOURNAL
First Circuit Affirms Dismissal of Fraudulent Transfer and Fiduciary Duty Claims
Michael L. Cook* This article discusses a recent U.S. Court of Appeals for the First Circuit decision holding that the debt-financed purchase of a business was not a fraudulent transfer and did not violate the fiduciary duty of the company's directors.
“Transaction fees are part of the standard, negotiated base compensation for the investment banker,” held the Bankruptcy Court for the Southern District of New York on Dec. 16, 2016. In re Relativity Fashion, LLC, 2016 Bankr. LEXIS 4339, *10 (Bankr. S.D.N.Y. Dec. 16, 2016) (Wiles, B.J.). The court denied objections to the transaction fees sought by two investment bankers, P and H, ruling that the objecting parties (a fee examiner, the debtor and a secured lender) had no right under Bankruptcy Code (“Code”) § 328(a) to challenge the transaction fees. Id. at *25.
“Puerto Rico’s Recovery Act is barred by § 903(1) … of the Bankruptcy Code,” held the U.S. Supreme Court on June 13, 2016. Commonwealth of Puerto Rico v. Franklin California Tax-Free Trust, 2016 WL 3221517, *11 (U.S. June 13, 2016) (5-2). Affirming the First Circuit, the court reasoned that Code § 903(i) “preempts state bankruptcy laws [enabling] insolvent municipalities to restructure their debts over the objections of creditors [and] instead requires municipalities to restructure [their] debts under Chapter 9 of the Code.” Id., at *2.
“Each litigant [in the U.S. legal system] pays [its] own attorney’s fees, win or lose, unless a statute or contract provides otherwise.” Baker Botts LLP v. ASARCO LLP, 135 S. Ct. 2158, 2164 (2015) (6-3), quoting Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 252-53 (2010). A majority of the U.S.
Is market value sufficient proof of reasonably equivalent value for purposes of the good-faith-for-value defense under Texas law? The U.S. Court of Appeals for the Fifth Circuit certified that question to the Texas Supreme Court on June 30, 2015, after vacating its earlier decision in Janvey v. The Golf Channel, Inc., 2015 WL 3972216, at *3 (5th Cir. June 30, 2015).
The U.S. Court of Appeals for the Fifth Circuit, on July 30, 2014, affirmed a district court’s dismissal of a litigation trustee’s $2.5-billion fraudulent transfer suit against the Chapter 11 debtor’s corporate parent based on the debtor’s solvency. U.S. Bank Nat’l Ass’n v. Verizon Communications, Inc., 2014 WL 3746476 (5th Cir. July 30, 2014). The district court, using a market capitalization valuation, found the debtor to be solvent when it closed a major transaction with its parent.
A New York bankruptcy court, on Dec. 12, 2013, issued a 166-page decision after a 34-day trial, concluding that the spin-off of a highly profitable energy business constituted a fraudulent transfer intended to shield the business from massive environmental liabilities, and awarding damages of up to approximately $14.5 billion.[1]Tronox Inc. et al. v. Kerr McGee et al. (In re Tronox et al.) (Bankruptcy S.D.N.Y. Dec. 12, 2013) (J.
The U.S. Court of Appeals for the Fifth Circuit held on March 1, 2013, that a bankruptcy court had not erred in applying a prime plus 1.75 percent interest rate to a secured lender’s $39 million claim under a "cramdown" plan of reorganization. Wells Fargo Bank N.A v. Texas Grand Prairie Hotel Realty, LLC (In the Matter of Texas Grand Prairie Hotel Realty, LLC), __ F.3d __, 2013 WL 776317 (5th Cir. Mar. 1, 2013).
The U.S. Court of Appeals for the Seventh Circuit affirmed a bankruptcy court’s dismissal of a single asset real estate case on Jan. 19, 2012, reasoning that the debtor’s proposed substitute collateral “was not the indubitable equivalent of the [undersecured lender’s] mortgage.”In re River East Plaza, LLC, 2012 WL 169760, *2 (7th Cir. Jan. 19, 2012) (Posner, J.). In the court’s words, the debtor “wanted [the lender] out of there and decided to seek confirmation of a [reorganization] plan . . .