As part of the Lehman Brothers Inc. ("Lehman") bankruptcy, the Bankruptcy Court for Southern District of New York ("Court") determined that three banks’ (the "Claimants") claims in relation to repurchase agreements ("repos") were not "customer claims" entitled to customer protection under the Securities Investor Protection Act of 1970 ("SIPA").

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In the Matter of: Village at Camp Bowie I, L.P., No. 12-10271 (5th Cir., Feb. 26, 2013)

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In re Indianapolis Downs, LLC, et al., 486 B.R. 286 (Bankr. D. Del. 2013)

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In re Maharaj, 681 F.3d 558 (4th Cir. 2012)

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The Court of Appeals for the Fourth Circuit is the first court of appeals to determine whether the absolute priority rule continues to apply to individual chapter 11 debtors. Taking the "narrow view" adopted by certain courts, the Fourth Circuit held that the rule was not abrogated by the amendments of the Bankruptcy Abuse Prevention and Consumer Protection Act, and therefore affirmed the bankruptcy court’s order denying confirmation of the proposed plan.

On Command Video Corp. v. Roti, Nos. 12-1351 and 12-1430 (7th Cir., Jan. 14, 2013)

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In re Castleton Plaza, LP,___F.3d__, 2013 WL 537269 (7th Cir. Feb. 14, 2013)

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In re Miller, 2013 WL 425342 (6th Cir. Feb. 5, 2013)

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The Sixth Circuit Court of Appeals held that the secured lender’s credit bid, which equaled the total debt owed on two properties but exceeded the value of the only foreclosed property involved in the sheriff’s sale, extinguished the entire debt. The court affirmed the order to lift the automatic stay only to require the lender to dismiss the second foreclosure action, release the promissory note and mortgage, and turn over the second property to the borrower free and clear.

In re Georges Marciano, No. 11-60070 (9th Cir., Feb. 27, 2013)

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Judgment creditors of Georges Marciano filed an involuntary chapter 11 petition against Marciano, who appealed the state judgments before the petition was filed. The Ninth Circuit ruled, in a case of first impression, that unstayed state court judgments on appeal were not "the subject of a bona fide dispute," and thus the Bankruptcy Court did not err when it entered an order for relief under chapter 11 against Marciano, notwithstanding the pending appeals.

Good news for lenders. Judge Carey of the Bankruptcy Court for the District of Delaware enforced a make-whole premium equal to 37 percent of the outstanding principal balance on a loan. He determined that, under New York state law, the calculation was not "plainly disproportionate" to the lender’s possible loss and was negotiated at arm’s length between sophisticated parties. In addition, Judge Carey held that a make-whole claim was not equivalent to "unmatured interest," which is unauthorized under Section 502 of the Bankruptcy Code, but instead was a claim for liquidated damages.