On July 27, 2009, the U.S. Court of Appeals for the Ninth Circuit held that a corporation's managers can be held personally liable under the Fair Labor Standards Act ("FLSA") for wages that the corporation failed to pay to employees prior to the employer's filing for bankruptcy. This opinion serves as a cautionary reminder of the risks managers potentially face when a corporation files for bankruptcy and has failed to pay its employees for all wages earned prior to the filing.

The following is a list of some recent larger U.S. bankruptcy filings in various industries. To the extent you are a creditor to any of these debtors, or other entities which may have filed for bankruptcy protection, you as a creditor are entitled to certain protections under the Bankruptcy Code.  

AUTOMOTIVE  

American Consolidated Transportation Cos., Inc and its affiliated debtors file for Chapter 11 in the Northern District of Illinois.  

PHARMACEUTICALS

In the last several months, a number of major mass media companies have filed for chapter 11 relief, including Ion Media Networks, Sun-Times Media Group, Tribune Company, Young Broadcasting and NV Broadcasting. With the economy still struggling to recover, and asset values continuing to decline, commentators speculate that even more mass media related bankruptcies are on the horizon. Certain aspects of a mass media bankruptcy present unique challenges for the various stakeholders due to the special regulatory requirements involved.

The recent economic tumult brings to the forefront the issue of fiduciary duties in the context of insolvency – an unfortunate circumstance faced by an increasing number of boards of directors and shareholders in these troubled times.

The rate of loan defaults has been on the rise, and given the current state of the economy, this trend is likely to continue. Doubtful loans may only get worse, raising that subject that lenders never want to hear, much less discuss: Foreclosure. Senior lenders will almost certainly have a first priority lien on all of the general assets of the borrower, and to the extent a junior lender is even permitted a second priority lien on these assets, it will be subordinate to the senior lender’s lien pursuant to a subordination agreement.

Today, the FDIC announced the next steps in further developing the government's Legacy Loan Program (LLP), by testing the LLP program's funding mechanism through the sale of a portfolio of residential mortgage loan receivership assets to a limited liability company (LLC) in exchange for an ownership interest in the LLC.

The Illinois Mortgage Foreclosure Law has been amended effective as of October 29, 2009, by adding new protections for occupants of dwelling units1 in properties that are in foreclosure. These protections will apply to projects which were rental housing from the outset, and to for-sale housing projects in which units are being rented pending sale or which have been converted to rental housing.  

Notice to Occupants by Receivers and Mortgagees in Possession

In a recently filed motion in the United States Bankruptcy Court Southern District of New York (the “Motion”), Lehman Brothers Holdings Inc. (“LBHI”) is seeking to compel Metavante Corporation (“Metavante”) to perform its obligations under a swap agreement between Metavante and Lehman Brothers Special Financing Inc.

Summary

Introduction