On 30 November 2011, New York Senate Bill 2713A was delivered to the desk of Governor Andrew Cuomo for signature. If signed by the Governor, the bill will add provisions to the New York Insurance Law regarding the treatment of qualified financial contracts in an insurance insolvency proceeding. “Qualified financial contracts” include derivatives, securities lending, repurchase agreements, futures contracts and other financial instruments. These contracts are typically documented under master agreements providing for netting of obligations between the parties.
On October 4, 2011, Judge James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York ruled in In re Lehman Bros. Inc., 2011 WL 4553015 (Bankr. S.D.N.Y. Oct. 4, 2011), that a “triangular setoff” does not satisfy the Bankruptcy Code’s mutuality requirement and that the Bankruptcy Code’s safe-harbor provisions do not eliminate that requirement in connection with setoffs under financial contracts.
A New York State Administrative Law Judge has denied an application for costs and fees filed by a petitioner who had succeeded in substantially reducing the asserted tax liability through settlement. Matter of Frank M. Grillo, DTA No. 823237 (N.Y.S. Div. of Tax App., Nov. 3, 2011). The decision turned on whether the position of the Department of Taxation and Finance was substantially justified, and that, in turn, depended upon whether the Department had used the correct address when it sent the Notice of Determination to the petitioner.
The U.S. District Court for the Southern District of New York recently issued a decision that will significantly limit the chances of success for many claims that the trustee of the Bernard L. Madoff Investment Securities (“BLMIS”) estate, Irving Picard, has brought against former investors in BLMIS to recover funds for the estate. In Picard v. Katz, 11 Civ. 3605 (S.D.N.Y.), District Judge Jed S. Rakoff issued a decision that dismissed most of the causes of action brought against a group of investors under the U.S.
A promissory note is a one-way undertaking. The maker promises to pay to the payee. There is nothing promised by the payee. The whole point of having a promissory note is to have a document that clearly states an obligation to pay. By contrast, most contracts are bilateral, meaning that each party promises to do something. And those promises are usually mutually dependent: if one party breaches, then the other may be excused from further performance. But that is not the case with a promissory note.
Earlier today AMR Corporation, its subsidiary American Airlines, Inc., and 18 other affiliates ("Debtors") filed petitions under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York in Manhattan.1 The case was assigned to Bankruptcy Judge Sean H. Lane. The Debtors have asked the Court to consolidate all 20 cases for procedural purposes under the captionIn re: AMR Corporation, Case No. 11-15463.
A federal judge sitting in New York but applying Maryland law recently held that a Directors and Officers (D&O) insurer is not required to provide insurance coverage because the policyholder breached the policy’s consent-to-settle provision when it settled a securities class action without obtaining the carrier’s prior approval. Federal Ins. Co. v. SafeNet, Inc., 2011 WL 4005353 (S.D.N.Y. Sept. 9, 2011).
In a client advisory sent by our office a few months ago, we described a decision in the Madoff saga in which the District Court for the Southern District of New York (the Court) closed off a potential avenue of significant recovery for the Madoff Trustee (the Trustee) and the Ponzi scheme victims by denying the Trustee standing to pursue certain claims against feeder funds – firms that sent investors’ funds to Madof
Judge Buchwald of the U.S.
The first day hearings in the Chapter 11 cases of MF Global Holdings Ltd and MF Global Finance USA Inc (together the "Debtors") were held on 1 November 2011 before Judge Martin Glenn in the U.S. Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court").