On February 14, 2013, the United States Court of Appeals for the Seventh Circuit in In re Castleton Plaza, LP,1 became the first court of appeals to consider whether a competitive auction is required when a debtor’s plan of reorganization provides an “insider” that does not hold an equity interest in the debtor with an exclusive option to purchase equity in exchange for new value since the Supreme Court’s landmark decision in 203 N. LaSalle2 more than a decade ago.
In re Sea Trail Corporation, Case No. 11-07370- 8-SWH (Bankr. E.D.N.C., Oct. 23, 2012)
CASE SNAPSHOT
On November 7, 2012, Judge Lewis A. Kaplan for the United States District Court of the Southern District of New York held that payments made in connection with a leveraged buyout to holders of privately held securities were safe harbored under section 546(e) of the Bankruptcy Code notwithstanding the fact that the payments passed directly from the purchaser to the seller without the use of any financial intermediary. AP Services LLP v. Silva, et al., Case No. 11-03005 (S.D.N.Y. Nov. 7, 2012).
Steven Enright and his wife borrowed money from a bank to buy dairy cows and other improvements for the family dairy farm. The bank loan was secured by assets of the Enrights, and also guaranteed by Steven’s parents, with the parents’ guarantee secured by a mortgage on the dairy farm itself (which was owned by the parents).
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
The Perishable Agricultural Commodities Act of 1930 (“PACA”)1 is deservedly renowned for its provisions creating a statutory trust on sold perishable commodities, and the products and revenues thereof. See 7 U.S.C. §499e. The PACA statutory trust can have dramatic consequences in the cases of bankrupt produce buyers; produce sellers often are paid in full, ahead of secured creditors holding liens on all inventory and accounts receivable. That is a story often told.
In Notice 2012-39 (the “Notice”), the IRS issued guidance announcing its intention to issue regulations with respect to certain transfers of intangible property by a U.S. corporation to a foreign corporation in a reorganization described in section 361 of the Internal Revenue Code (the “Code”), citing significant policy concerns involving certain intellectual property transfers that permit U.S. persons to repatriate earnings without U.S. income taxation. The IRS’ position in the Notice will impact repatriation planning strategies.
Background
In this memorandum opinion, the Court of Chancery held that plaintiff note holders waived their statutory right to seek appointment of a receiver for a debtor corporation where the notes they purchased were subject to clear language in a “No-Action Clause” of the governing indenture, which prohibited such action unless certain requirements were met.
On June 28, 2012, Judge Allan Gropper of the United States Bankruptcy Court for the Southern District of New York declined to appoint an official committee of equity holders in Kodak’s chapter 11 cases. The bankruptcy court determined that the appointment of an official committee was not warranted at that time, given that the costs to the bankruptcy estates would be substantial and equity’s interests were already represented by other constituencies seeking to maximize value and by a sophisticatedad hoc group of shareholders. In re Eastman Kodak Company, Case No
One of the benefits to a corporate form of entity is the protection of shareholders from liability for obligations of the corporation. Of course, as we all know, there are still legal claims which could impose liability on a corporate shareholder for obligations of the corporation. In a recent case, a former executive of a corporation tried to assert a tortious interference claim against a majority shareholder, when it terminated severance payments that were owed to the executive. (Nation v. American Capital, Ltd., 7th Circuit Court of Appeals, Case No.