Public policy in New York prompted the establishment of, and recent increase to the Homestead Exemption (the “Exemption”), codified in the CPLR at §5206. The Exemption, a statutorily created right, affords property owners (and their surviving heirs) certain protections from a creditor’s right to levy against a judgment debtor’s real property for the purpose of satisfying a personal money judgment. The rationale behind the need for the Exemption is to ensure that a property owner is not left wholly insolvent once his primary residence is taken from him.
On February 13, 2013, the U.S. Bankruptcy Court for the Southern District of New York approved a stipulation between LightSquared and, among others, its lenders to extend until July 15, 2013 LightSquared’s exclusive right to file a Chapter 11 plan of reorganization. That right was due to expire on January 31, 2013, and then was extended until the court ruled on LightSquared’s motion to extend that date.
In re 18 RVC, LLC, Case No. 812-72378-reg (Bankr. E.D.N.Y., Oct. 22, 2012)
CASE SNAPSHOT
On January 7, 2013, the Judge Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York held that a dispute concerning the debtors’ use of cash collateral was not subject to arbitration, notwithstanding a broad arbitration clause in the parties’ underlying agreement, because the decision to allow a debtor to use cash collateral constituted a “core” issue and was a fundamental aspect of the bankruptcy process. In re Hostess Brands, Inc., No. 12-22052 (RDD), 2013 WL 82914 (Bankr. S.D.N.Y. Jan. 7, 2013).
Background
A lender’s entitlement to a make-whole premium, that is, a prepayment penalty designed to compensate the lender for the loss of interest payments it would have received had the borrower continued to service the debt through the maturity date of the loan, depends principally on the plain language of the bond indenture or credit agreement. See, e.g.,HSBC Bank USA, N.A. v. Calpine Corp. (In re Calpine Corp.),No. 07 Civ 3088 (GBD), 2010 WL 3835200, at *4 (S.D.N.Y. Sept.
Criminal defendants facing onerous restitution obligations as part of their sentence might contemplate a bankruptcy filing, in the hope of staving off the restitution obligation. In a case of first impression, the Second Circuit recently considered whether the Bankruptcy Code’s automatic stay provision halts a defendant’s obligation to pay restitution and firmly closed the door on that potential gambit.
A recent case1 decided by Judge Stuart Bernstein of the United States Bankruptcy Court for the Southern District of New York demonstrates that a developer's properly crafted chapter 11 plan of reorganization can effectively "restore" trust funds that it previously had "diverted" under the New York Lien Law.
Last week the United States Bankruptcy Court for the Southern District of New York approved debtor-American Airlines’ motion to enter into a secured financing transaction and repay certain pre-petition aircraft financing without paying make-whole premiums. The indenture trustee sought to ground the motion by asserting that the make-whole had to be paid, but it was the indenture trustee, not American, that crashed and burned.
Chapter 15 of the Bankruptcy Code,1 the U.S. enacted equivalent of the UNCITRAL Model Law On Cross-Border Insolvencies, has received a fair amount of use by distressed shipping companies since it was enacted in 2005. In 2007, we wrote in these pages that Chapter 15 might provide a welcome U.S. safe harbor. (See “Shipping, Finance, and Insolvencies: A Homeport in the United States?” Mainbrace, June 2007, No. 2). More recently, in 2009, we published “Shipping, Finance, and Insolvencies: The Black Swan Comes Home to Roost” (Mainbrace, January 2009, No.
On January 17, 2013, the United States Bankruptcy Court for the Southern District of New York decided that American Airlines (American) was not obligated to pay certain make-whole premiums set forth in some of its loan indentures at the time that American refinanced the applicable loans. A makewhole premium typically allows a lender to be compensated for having to reinvest in a lower interestrate environment when a borrower prepays its debt before the original maturity date.