Be careful what you’ve promised your customers…or what has been promised about data you buy!
Investor group “Save the Queen” purchased the historic Queen Mary ship and surrounding land and development rights for $43 million from the previous operator, Queen’s Seaport Development, which filed for Chapter 11 bankruptcy in 2005.
On October 3, 2007, legislation was introduced in the U.S. Senate to amend provisions of the U.S. Bankruptcy Code that currently prevent homeowners from using bankruptcy to modify mortgage loans secured by their primary residence. Proponents of the legislation believe that permitting homeowners to modify mortgage loans in bankruptcy will encourage lenders to engage in voluntary modifications prior to bankruptcy.
While discussions of real estate loan structurings and workouts frequently revolve around protecting the interests of the lender, a borrower has its own interests to look after.
Conventional wisdom was that bankruptcy and insolvency were not major considerations when receiving outsourcing services from reputable, credit-worthy suppliers.
As more financial institutions get swallowed up by better-positioned industry competitiors or find themselves being forced to file for bankruptcy, many of these institutions' technology providers also are being impacted by the worsening economic crisis.
As if buying distressed debt is not challenging enough given the underlying business considerations, the possible, and perhaps likely, bankruptcy filing of your soon-to-be borrower presents a maze of issues the note purchaser should consider before acquiring the debt.
1. Know Your Seller
On April 8, 2009, the United States Court of Appeals for the Second Circuit found that "termination premiums" due under Section 4006(a)(7) of the Employee Retirement Income Security Act ("ERISA") are not "claims" under the Bankruptcy Code and are therefore not dischargeable in bankruptcy.
In the last decade, commercial landlords have favored obtaining from tenants standby letters of credit over security deposits because standby letters of credit provided added security in the event of a tenant’s bankruptcy.
On August 11, 2009, Judge Gropper of the United States Bankruptcy Court for the Southern District of New York denied motions to dismiss bankruptcy petitions of several special-purpose entity subsidiaries (SPEs) of General Growth Properties, Inc. (GGP) that were solvent, financially healthy companies structured to be remote from the bankruptcy risks of GGP and its other affiliates.