In the case of Florida Dept. of Revenue v. Piccadilly Cafeterias, Inc.,¹ the United States Supreme Court ruled that the exemption from the payment of stamp taxes or similar taxes on transfers of property of a Chapter 11 debtor’s estate, contained in section 1146(a) of the Bankruptcy Code,² does not apply to transfers of property made before a Chapter 11 plan is confirmed.

In Bethlehem Steel Corp. v. Moran Towing Corp. (In re Bethlehem Steel Corp.),1 the United States Bankruptcy Court for the Southern District of New York held that preferential transfer claims were not arbitrable. The Court reasoned that because the avoidance powers did not belong to the debtor, but rather were creditor claims that could only be brought by a trustee or debtor-in-possession, they were not subject to the arbitration clauses in contracts to which the creditors were not parties.

The Dispute and the Arbitration Clauses

Over the past few days, Members of Congress have engaged in intensive debate over the terms of the bailout package, now commonly referred to as the Troubled Asset Relief Program (“TARP”). Both Democrats and Republicans have offered criticisms and alternatives to the original Treasury proposal which are summarized below.

Senator Dodd Proposal

Senator Christopher Dodd (D-CT), Chairman of the Senate Committee on Banking, Finance and Urban Affairs has drafted a 100 page bill that encompasses many of the Democratic proposals discussed to date. His bill would:

Creditors often consider filing an involuntary bankruptcy petition against their financially distressed debtors. Before using this extraordinary remedy, a creditor should evaluate whether it will achieve a valid business objective. Additionally, each creditor should evaluate whether there is a valid basis to support the filing. When the debtor's bankruptcy is appropriate, it can be a valuable step in maximizing a creditor's recovery. But the stakes are high.

This week, the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services held a second round of hearings, as a follow-up to the hearings held

Reports on the White House administration and members of Congress have suggested that the Treasury Department is nearing a decision to provide assistance to at least two of the Big Three U.S. automakers.

On December 18, 2008, in connection with the bankruptcy of the Steve & Barry’s retail chain, the United States Bankruptcy Court for the Southern District of New York held that under Section 365(d)(3) of the U.S. Bankruptcy Code (the “Code”), landlords are entitled to pro-rata postpetition rental payments for the monthly “stub” period following the filing of the debtor-tenant’s bankruptcy petition provided that the debtor-tenant continues to enjoy the right to use and occupy the leased property.

The Fourth Circuit’s reversal of the bankruptcy court’s narrow reading of swap agreement clarifies the nature of agreements entitled to broad protections under the Bankruptcy Code, but until the decision is fully implemented on remand, swap participants will bear increased risk in hedging transactions.

On Thursday, General Motors Corporation (GM) filed its Annual Report on Form 10-K with the Securities and Exchange Commission which notably included an opinion of its auditors on its financial statements in which the auditors stated that GM’s “recurring losses from operations, stockholders’ deficit, and inabili

Much is being written about the significant losses suffered by automobile suppliers to both the domestic and transplant automobile manufacturers. These losses are creating alarm among many others, including the OEMs themselves, according to Dave Hannon at Purchasing Magazine.