Ring v. First Niagara Bank, N.A. (In re Sterling United, Inc.), 519 B.R. 586 (Bankr. W.D.N.Y. 2014) –
A chapter 7 trustee sought to recover as preferences payments made by the debtor to a lender and proceeds of collateral liquidation received by the lender based on arguments regarding whether UCC financing statements adequately perfected the lender’s security interests.
Introduction
A prominent New York bankruptcy court is the latest in a series of courts to deny lenders the full benefit of their bargains when borrowers attempt to restructure debt through a chapter 11 reorganization. Continuing a trend that includes a 2013 decision from the Second Circuit in the American Airlines bankruptcy, the Fifth Circuit's 2014 decision in the case of Denver Merchandise Mart, and the New York federal district court's 2010 affirmance in the Calpine bankruptcy case, the bankruptcy court for the Southern District of New York has ruled, in In re MPM Silicones, LLC (Momen
Questions Standing of Indenture Trustees to Pursue Fraudulent Conveyance Claims
Any buyer of assets from a company in any degree of financial stress should be concerned about the transaction being attacked as a fraudulent transfer. Officers and directors of a selling entity also have concerns about this risk due to potential personal liability.
United States Bankruptcy Courts, particularly in New York and Delaware, are already a destination for multinational corporate bankruptcy filings, but a recent study co-authored by Stephen J. Lubben, a Seton Hall Law School professor and frequent contributor to The New York Times’ DealBook blog, suggests that the current volume of foreign debtors filing in the U.S.
There has been quite a lot of discussion over the past few months about the bench rulings issued by Judge Drain of the Bankruptcy Court for the Southern District of New York inMomentive Performance Materials (see our extensive coverage in four parts here,
“Life is not about perfect information. Life is about choices, which is why you have elections.”