A Florida bankruptcy court, on Oct. 13, 2009, issued a 182-page decision after a 13-day trial, among other things, avoiding on fraudulent transfer grounds (a) secured subsidiary guarantees of $500 million and (b) $420 million pre-bankruptcy payments. In re Tousa, Inc., et al., Case No. 08-10928; Adv. P. 08-1435 (S.D. Fla. Oct. 13, 2009). The decision is on appeal to the district court.  

Relevance  

On October 25, commercial real estate financing company Capmark Financial Group Inc., together with over 40 of its affiliates, filed a voluntary petition for chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. The debtors cite among the reasons for their filing the declined values of their loan portfolio, tightening of credit markets and a heavy debt burden. Capmark, formerly a part of GMAC's residential mortgage business until 2006, listed $20.1 billion in assets and $21 billion in liabilities on its petition.

Property in oroville and susanville, california : in re gumba investors, llc (bankr. e.d. cal.) case no. 09-40571

363 Asset Sales: The Latest Restructuring Tool

Introduction

The dearth of credit available for companies in financial distress means an asset sale may be the only way to save the business and jobs. It also presents unusually attractive investment opportunities for public and private companies, private equity and hedge funds, and other investors with capital and an ability to move expeditiously.

A recent decision in the U.S. Bankruptcy Court for the Southern District of Florida, In re Tousa,[1] has received widespread attention for its near wholesale rejection of insolvency “savings clauses,” and the resulting order requiring lenders to disgorge hundreds of millions of dollars. The decision raises numerous practical problems for participants in the secondary loan and derivatives markets, and more generally for commercial lenders and borrowers.

Background

In a troubled economy where businesses are struggling to survive, it is no surprise that many organizations find themselves insolvent or nearly insolvent. Directors of insolvent or nearly insolvent organizations are facing the question of to whom they owe their duty of loyalty, and whose best interest must they consider when making decisions. When in the zone of insolvency, directors still owe a duty to stakeholders to act in their best interests.

In an October 13, 2009 decision involving bankrupt homebuilder TOUSA, Inc. (“TOUSA”), the United States Bankruptcy Court for the Southern District of Florida (the “Court”) avoided as fraudulent transfers certain liens given and debt obligations incurred by several of TOUSA’s subsidiaries to a syndicate of lenders who provided $500 million of new loans to TOUSA. In addition, the Court ordered those lenders, and others that received the proceeds of the new loans, to repay hundreds of millions of dollars to the bankrupt estates of these subsidiaries.

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  

Holley Performance Products, four affiliates file for Chapter 11 protection for the second time.  

AUTOMOTIVE COMPONENTS

Yesterday, Bank of Elmwood, headquartered in Racine, Wisconsin, was closed by the Wisconsin Department of Financial Institutions, and the FDIC was named as receiver.

United States Supreme Court

Washington, D.C.

November 3, 2009