On November 13, 2008, Lehman Brothers Holdings Inc. and its affiliated debtors in Chapter 11 (collectively, “Lehman”) filed a motion (the “Motion”) seeking Bankruptcy Court approval of procedures (the “Procedures”) for the assumption and assignment of derivative contracts not yet terminated by its various counterparties, as well confirmation of Lehman’s right to enter into settlement agreements for the termination of derivative contracts that have been terminated by its counterparties post-petition.

As we have recently noted, the federal banking agencies have worked together to expand the pool of investors eligible to bid to acquire failing depository institutions. See our 21st Century Money, Banking & Commerce Alert entitled “OCC Approves Shelf Charter for National Banks to Encourage New Investment” (Nov. 25, 2008). The Federal Deposit Insurance Corporation (“FDIC”) has recently modified the receivership process in less obvious ways that also may have important ramifications for investors. 

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

On November 25, LandAmerica Financial Group, Inc. (“LandAmerica”) filed a Chapter 11 petition in Virginia, seeking bankruptcy protection. By separate agreement (the “Stock Purchase Agreement”), LandAmerica agreed to sell Commonwealth Land Title Insurance Company (“Commonwealth”) to Chicago Title Insurance Company (“Chicago Title”) and Lawyers Title Insurance Company (“Lawyers”) and United Capital Title Insurance Company (“United”) to Fidelity National Title Insurance Company (“Fidelity”).

Yesterday, the Big Three U.S. auto chief executives submitted restructuring plans to the Senate Banking Committee and the House Financial Services Committee, in response to House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid’s November 21st request calling on the auto executives to “submit a credible restructuring plan that results in a viable industry, with quality jobs, and economic opportunity for the 21st century while protecting taxpayer investments” by December 2nd.

While discussions of real estate loan structurings and workouts frequently revolve around protecting the interests of the lender, a borrower has its own interests to look after.

Attention holiday shoppers. Not sure what to buy Aunt Matilda or cousin George? A gift card allows them to buy whatever they like? Maybe. Large retailers such as Sharper Image, Bombay Company and Linens ‘N Things have filed for bankruptcy or gone out of business, leaving behind millions of dollars in unused gift cards. In bankruptcy, money left on a gift card is treated as a debt, which the bankruptcy court can decide if it is to be repaid, and how. If the retailer stays in business, the court may allow it to continue to honor its cards, but even then consumers may not get the full value.

Late the night of Nov. 25, LandAmerica Financial Group, Inc. and its subsidiary, LandAmerica 1031 Exchange Services, Inc., filed a Chapter 11 petition in the U.S. Bankruptcy Court for the Eastern District of Virginia ("Bankruptcy Court"), seeking bankruptcy protection for both entities. The action does not cover Commonwealth Land Title Insurance Company or Lawyers Title Insurance Company, two LandAmerica subsidiaries that are each domiciled in the State of Nebraska.

As the Seventh Circuit has recently made clear in Airadigm Communications, Inc. v. FCC, bankruptcy courts have the discretion under Bankruptcy Code §524 to approve a release contained in a Plan of Reorganization of a party which did not seek bankruptcy protection. Such a non-debtor release is more likely to be approved by the bankruptcy court where the creditors do not object to the confirmation of the Plan or vote to approve the Plan.

While some states have mandated delays to the foreclosure process, curbing the number of foreclosure filings in recent months, many report that such legislation is only a temporary cure. Foreclosure filings include default notices, auction sale notices and bank repossessions. According to James J. Saccacio, chief executive officer of RealtyTrac, October marked the 34th consecutive month where U.S. foreclosure activity increased compared to the prior year. RealtyTrac U.S.