Fourth Circuit concludes that certain commissions and margin interest payments are protected from avoidance by "stockbroker defense"

CASE SNAPSHOT

In a case of first impression, the Fourth Circuit determined that broker commissions shown to be reasonable and customary parts of settling stock sales constitute "settlement payments" and that the payment of margin interest constitutes "margin payments" under section 546(e) of the Bankruptcy Code such that these types of payments are immune from avoidance and recovery by a bankruptcy trustee.

FACTUAL AND PROCEDURAL BACKGROUND

Filed under:
USA, Capital Markets, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Interest, Margin (finance), Commission (remuneration), Fourth Circuit
Authors:
Luke A. Sizemore
Location:
USA
Firm:
Reed Smith LLP
In re Lehman Brothers Inc.: repo claims fall outside of SIPA protection

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").

Filed under:
USA, New York, Capital Markets, Insolvency & Restructuring, Litigation, Reed Smith LLP, Security (finance), Lehman Brothers, United States bankruptcy court
Authors:
Thomas H. Watterson
Location:
USA
Firm:
Reed Smith LLP
Bankruptcy Court concludes that renewable power purchase and sale agreement is a "forward contract" entitled to safe harbor protections

CASE SNAPSHOT

Filed under:
USA, Insolvency & Restructuring, Reed Smith LLP, Bankruptcy, Debtor, Renewable energy, Title 11 of the US Code, United States bankruptcy court
Authors:
Luke A. Sizemore
Location:
USA
Firm:
Reed Smith LLP
Seventh Circuit overturns veil-piercing

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

CASE SNAPSHOT

Filed under:
USA, Illinois, Insolvency & Restructuring, Litigation, Reed Smith LLP, Limited liability company, Seventh Circuit
Authors:
Stephen T Bobo
Location:
USA
Firm:
Reed Smith LLP
Seventh Circuit requires competition for insider’s new-value plan of reorganization

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

CASE SNAPSHOT

Filed under:
USA, Banking, Insolvency & Restructuring, Litigation, Reed Smith LLP, Interest, Seventh Circuit
Authors:
Stephen T Bobo
Location:
USA
Firm:
Reed Smith LLP
Court affirms separate classification, holds artificial impairment not per se impermissible

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

CASE SNAPSHOT

Filed under:
USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Unsecured debt, Foreclosure, Good faith, Fifth Circuit
Authors:
Ann E. Pille
Location:
USA
Firm:
Reed Smith LLP
Post-petition lock-down agreement does not equate to impermissible vote solicitation

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

CASE SNAPSHOT

Filed under:
USA, Delaware, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Solicitation, Capital punishment, Title 11 of the US Code
Authors:
Lauren S. Zabel
Location:
USA
Firm:
Reed Smith LLP
Fourth Circuit is the first to hold absolute priority rule applicable to individual Chapter 11 debtors

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

CASE SNAPSHOT

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.

Filed under:
USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Debt, United States bankruptcy court, Fourth Circuit
Authors:
Alison Wickizer Toepp
Location:
USA
Firm:
Reed Smith LLP
Seventh Circuit rules rejection of executory trademark license does not terminate the license, creates a split of authority

Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC, 686 F.3d 372 (7th Cir. 2012)

CASE SNAPSHOT

In a matter of first impression in the Seventh Circuit, the court held that a chapter 7 trustee’s rejection of an executory contract did not terminate the trademark license contained therein.

FACTUAL BACKGROUND

Filed under:
USA, Insolvency & Restructuring, Litigation, Trademarks, Reed Smith LLP, Bankruptcy, Seventh Circuit
Authors:
Brian M. Schenker
Location:
USA
Firm:
Reed Smith LLP
Venue created by subsidiary incorporation ‘bootstraps’ venue selection

In re Patriot Coal Corporation, et al., 492 B.R. 718 (2012)

CASE SNAPSHOT

Filed under:
USA, New York, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Coal, Subsidiary, United States bankruptcy court
Location:
USA
Firm:
Reed Smith LLP