In re Coastal Broadcasting Systems, Inc., Case No. 11-10596 (Bankr. D. N.J. July 6, 2012)

CASE SNAPSHOT

At confirmation, the bankruptcy court considered whether the assignment of voting rights in an intercreditor agreement was enforceable. The bankruptcy court noted that various courts had reached differing conclusions, but ultimately found that the voting assignment in the intercreditor agreement before it was enforceable.

FACTUAL BACKGROUND

In re Furrs Supermarkets, Inc., No. 11-01-10779 SA (Bankr. D.N.M. Aug. 15, 2012)

CASE SNAPSHOT

Wright v. Owens Corning, 450 B.R. 541 (W.D. Pa. 2011), aff’d in part, rev’d in part, 2012 WL 1759992 (3rd Cir. Pa.) (May 18, 2012).

In re WL Homes LLC, Case No. 09-10571 (Bankr. D. Del. May 16, 2012)

CASE SNAPSHOT

The debtor’s insurer sought to lift the automatic stay in order to setoff $2.2 million in return premiums against potential defense costs that the insurer expected to incur related to certain insurance claims made against the debtor. The court denied the motion, finding that the insurer had not established a right to setoff under either state law or the Bankruptcy Code.

FACTUAL BACKGROUND

1) Dev. Specialists, Inc. v. Akin Gump Strauss Hauer & Feld LLP, Case No. 1:11-cv-05995 (S.D.N.Y. May 24, 2012)

CASE SNAPSHOT

Lumbermens Mutual Casualty Company and American Manufacturers Mutual Insurance Company (part of the Lumbermens Mutual Group and formerly known as Kemper) (“Lumbermens”), after years of struggling financially under the supervision of the Illinois Department of Insurance, recently entered rehabilitation proceedings. Policyholders who purchased workers’ compensation and other types of insurance from Lumbermens should be aware that many opportunities for recovery remain.

Not too long ago we advised that it’s a good idea to check whether your plaintiffs were actually alive when they filed their suits.  We’d like to amend that to add that it’s also a good idea to check whether your plaintiffs were financially alive as well.  

Occasionally we find a bankruptcy case that we know will be of interest to lenders, and this is one of them. I’m calling this one a “two-step” not just because it makes for a catchy title, but also because this is the second time we’ve seen this case, and this time the outcome is less favorable.

The United States Supreme Court emphatically upheld a secured creditor’s right to credit bid in bankruptcy cases. In RadLAX Gateway Hotel, et al. v. Amalgamated Bank, 566 U.S.___ (May 29, 2012), the Court found the case an "easy" one to resolve: when a secured creditor is denied the right to credit bid its debt in the sale of its collateral as a part of a bankruptcy plan, it will not receive the "indubitable equivalent" of its secured claim in the form of cash generated from the sale. The Court's unanimous decision should help restore certainty in lending.

In In re Crane, the Bankruptcy Court for the Central District of Illinois recently held that a mortgage can be avoided in bankruptcy if it fails to include the maturity date and the interest rate of the underlying debt within the mortgage document. The court found that failing to include these loan terms on the face of the mortgage as recorded, violated the requirements of Illinois conveyancing statutes, and therefore did not provide the constructive notice to the trustee necessary for preventing the avoidance.