A bankruptcy judge in New York court recently dismissed a case filed under chapter 15 of the U.S. Bankruptcy Code because the debtors did not have their center of main interests or business operations in the jurisdiction where the initial, foreign case was filed, the British Virgin Islands (BVI). In re Creative Finance Ltd. (In Liquidation), No. 14-10358, 2016 WL 156299 (Bankr. S.D.N.Y. Jan. 13, 2016).
1In Sutton 58 Associates LLC v.
U.S. bankruptcy law permits debtors-in-possession and trustees to sell assets free and clear of claims, liens and other interests. But a federal judge in New York ruled recently that a purchaser does not necessarily buy free and clear when a product manufactured pre-bankruptcy causes injury after a sale closes. Morgan Olson L.L.C. v. Frederico (In re Grumman Olson Indus., Inc.), No. 11 Civ. 2291, 2012 U.S. Dist. LEXIS 44314 (S.D.N.Y. Mar. 29, 2012) (JPO). In this situation, the purchaser can remain liable for injuries caused by the asset purchased from the debtor.
There are several ways in which property owners can advantageously use the Bankruptcy Code to effectuate strategic dispositions of assets. But the bankruptcy process can be fraught with uncertainty that can upend the best laid plans. The matter of In re Wansdown Properties Corp. N.V., No. 19-13223 (SMB), 2020 WL 5887542 (Bankr. S.D.N.Y. Oct. 5, 2020) provides an instructive and cautionary example.
LEHMAN BANKRUPTCY
In re: Lehman Brothers Holdings, Inc., et al., No. 08-13555
On March 6, 2012, Lehman Brothers Holdings Inc. and its affiliated debtors announced that their Modified Third Amended Joint Chapter 11 Plan, which had been confirmed by the United States Bankruptcy Court for the Southern District of New York on December 6, 2011, had become effective. Distributions under the Plan will begin on April 17, 2012.
A recent case in the Southern District of New York, U.S. Bank, NA v. T.D. Bank, NA, applied the so-called Rule of Explicitness to the allocation of recoveries among creditors outside of a bankruptcy proceeding. In the bankruptcy context, this rule requires a clear and unambiguous intention to turn over post-petition interest to senior creditors at the expense of junior creditors. The court in this case found the requisite documentary clarity to pay post-petition interest ahead of the distribution of principal.
The Bottom Line
On Jan. 17, the U.S. Court of Appeals for the Second Circuit vacated the decision of the District Court for the Southern District of New York in Marblegate Asset Management, LLC v.
The Bottom Line