The United States District Court for the District of Minnesota recently rejected a creditor’s argument that when a Chapter 11 case is converted to one under Chapter 7 and the estate is administratively insolvent 11 U.S.C. § 726(b) requires disgorgement of amounts approved and paid to Chapter 11 administrative claimants.

On November 8, a federal jury for the U.S. District Court for the District of Minnesota awarded the ResCap Liquidating Trust, the post-bankruptcy successor-in-interest to Residential Funding Company, LLC (RFC), a $27.8 million verdict in an indemnity case against a correspondent lender.

In a recent decision of the United States Court of Appeals for the Eighth Circuit, the court reversed a ruling against a D&O insurer in a coverage action arising from a bankruptcy case. In re: SRC Holding Corp., Nos. 07-1327/1335 (8th Cir. Oct. 27, 2008). Click here to read the Eighth Circuit's decision.

Two D&O insurers have asked the U.S. Bankruptcy Court for the District of Minnesota to lift an automatic stay in a bankruptcy proceeding pending against their insureds so that the insurers can pursue their coverage defenses as counterclaims against the insureds in a pending declaratory judgment action.In Re Petters Company, Inc., et al., Case No. 08-45257 (Bankr. D. Minn.).