Almost every significant bankruptcy case eventually involves preference demands and litigation. Around this abundance of litigation developed a significant body of jurisprudence, to which Judge Sean Lane of the Southern District of New York Bankruptcy Court recently added in clarifying the ordinary course of business preference defense.
In re Lehman Bros. Holdings Inc., 513 B.R. 624 (Bankr. S.D.N.Y. 2014)
A purchaser of residential mortgage-backed securities filed proofs of claim based on alleged misrepresentations by the debtors in offering materials distributed in connection with sale of the securities. The debtors objected and sought to subordinate the claims as claims arising from securities “of” the debtors.
In the well-known children’s story book written by P.D. Eastman and edited by beloved Dr. Seuss, a baby bird embarks on a quest to find his mother, asking a hen, a dog, and a kitten, among others, the famous question, “Are you my mother?” If Dr. Seuss had penned the recently-decided case of Thielman v. MF Global Holdings, Ltd.
A junior mortgagee sought to subordinate the senior mortgage loan based on an argument that modification of the senior loan impaired the junior mortgagee’s rights.
On Aug.
In Cortlandt St. Recovery Corp. v Hellas Telecom., S.A.R.L., 2014 NY Slip Op 24268 (Sup. Ct., N.Y. County 2014), the Supreme Court of the State of New York ruled on two important issues related to the right to sue for recovery with respect to notes issued under indentures. First, the court held that assignments of a right of collection, but not title to the claims or the note itself, are insufficient as a matter of New York law to confer standing upon an assignee to sue for recovery on a defaulted note.
On September 9, 2014, the Bankruptcy Court for the Southern District of New York held that certain senior lenders were not entitled to the benefit of their indentures’ make-whole premiums, because they had voluntarily accelerated their notes. As we have reminded our readers several times, careful drafting of what may seem like basic boilerplate provisions is important. Seemingly benign stand-alone provisions may have unintended consequences when linked together in a single agreement.
Why it matters
Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 12-mc-115 (S.D.N.Y. July 6, 2014) [click for opinion]
On August 26, 2014, Judge Robert D. Drain of the Bankruptcy Court for the Southern District of New York issued a bench ruling in In re MPM Silicones, LLC, Case No. 14-22503 (RDD), on several aspects of the plan of reorganization filed by debtor Momentive Performance Materials, Inc., a specialty chemicals manufacturing company, and its affiliated debtors.