On February 10, 2012, Judge Sean H. Lane of the U.S. Bankruptcy Court for the Southern District of New York issued a ruling in a Chapter 15 bankruptcy proceeding where The Containership Company (TCC) is the debtor. Numerous shippers in the proceeding requested that the Bankruptcy Court defer to the Federal Maritime Commission with respect to the shippers' claims that TCC violated the Shipping Act of 1984.

Recently, a Colorado bankruptcy court considered for the first time the effects of Bankruptcy Code Section 552 on a lender’s security interest in the proceeds of an FCC broadcast license. The court held that a prepetition security interest would not extend to proceeds received from a post-petition transfer of the debtor’s FCC license because the debtor did not have an attachable, prepetition property interest in the proceeds. Such an interest does not arise until the FCC approves an agreement to sell the license.

On March 24th, the Sixth Circuit joined seven other federal appellate courts in holding that negative equity is included in a creditor's purchase money security interest and is not subject to a bankruptcy court's cramdown authority under Chapter 13 of the Bankruptcy Code. Nuvell Credit Corp. v. Westfall.  

The case of Executive Benefits Insurance Agency v. Arkison (In re Bellingham Ins. Agency), No. 12- 1200, was easily one of the most closely watched bankruptcy cases in many years. Last week’s decision in that case, however, was far less dramatic than  some practitioners feared it might be. The Supreme Court answered two important questions regarding the power of bankruptcy courts that it left open three years ago in Stern v. Marshall.

On November 4th, the Federal Bankruptcy Court granted the SIPC Trustee's motion to establish procedures for the issuance of subpoenas for document production and depositions in connection with the SIPC Trustee's independent investigation into the business and affairs of MF Global. Access to documents produced by witnesses and attendance at examinations will be limited to the SIPC Trustee and his professionals. The SIPC, SEC and CFTC will have access to the discovery upon the execution of confidentiality agreements.

On December 23rd, the Third Circuit addressed whether the automatic stay provisions of the Bankruptcy Code prevents a home mortgage lender from accounting for the pre-petition escrow shortage in its post-petition calculation of future monthly escrow payments. The Court concluded that when the terms of the loan allow the lender to escrow taxes and insurance payments, the lender has a pre-petition claim. In re Francisco Rodriguez.  

This week, in a 2-1 decision affirming the District Court’s reversal of a ruling of the Bankruptcy Court for the Eastern District of Pennsylvania, the United States Court of Appeals for the Third Circuit held that secured creditors do not have a right as a matter of law to credit bid their claim at an auction pursuant to a plan of reorganization where the debtor intends to impose the plan on its secured creditors through a “cramdown” under section 1129(b)(2)(A)(iii) of the Bankruptcy Code; i.e., a plan providing the secured creditors with the “indubitable equivalent” of their secured claim.

The staff of the Federal Trade Commission’s Bureau of Consumer Protection recently sent a letter to the court handling ConnectEdu’s bankruptcy proceedings and sale of assets, which may include their customer’s personal information.

A New York bankruptcy court recently considered the effects of Bankruptcy Code section 552 on a lender’s security interest in the proceeds of an FCC broadcast license and held that a prepetition security interest extended to proceeds received from a post-petition transfer of the debtors’ FCC license. Sprint Nextel Corp. v. U.S. Bank. N.A. (In re Terrestar Networks, Inc.), Case No. 10-15446, Adv. Pro. No. 10-05461 (Bankr. S.D.N.Y. Aug. 18, 2011). This result directly conflicts with Spectrum Scan LLC v. Valley Bank and Trust Co. (In re Tracy Broadcasting Corp.), 438 B.R.

On December 1st, the Seventh Circuit affirmed the approval of a receiver's plan to distribute the assets of a failed investment manager, finding that where a receivership trust lacks sufficient assets to fully repay investors and the investors' funds are commingled, a pro rata distribution plan is appropriate, and that the trial court properly rejected the objectors' arguments that their redemption requests made them creditors and not equity holders. SEC v.