The release provisions in a corporate debtor’s Chapter 11 plan were “not sufficiently specific to release” a plaintiff’s Fair Labor Standards Act (“FLSA”) claim against the debtor’s president (“P”), held the U.S. Court of Appeals for the Fifth Circuit on Jan. 6, 2016. Hernandez v. Larry Miller Roofing, Inc., 2016 WL 67217, at *4 (5th Cir. Jan. 6, 2016).
An insolvent corporate subsidiary’s payment of its parent’s contractual obligations was not a fraudulent transfer when “the [subsidiary] Debtor received reasonably equivalent value in exchange for [its cash] transfers,” held the U.S. Court of Appeals for the Eleventh Circuit on Sept. 4, 2015. In re PSN USA, Inc., 2015 WL 5167803, at *7 (11th Cir. Sept. 4, 2015) (per curiam).
“A corporate insider who personally guaranteed” the debtor’s loan was not liable on a bankruptcy trustee’s preference claim when the corporate debtor repaid its lender, held the U.S. Court of Appeals for the Ninth Circuit on May 6, 2015. In re Adamson Apparel, Inc., 2015 WL 2081575 (9th Cir. May 6, 2015) (2-1).
The United States Supreme Court, on July 1, 2014, granted a petition for certiorari in an important Seventh Circuit case limiting the power of bankruptcy courts to decide property disputes. Wellness International Network, Ltd. et al. v. Sharif, 727 F.3d 751 (7th Cir. 2013). The Seventh Circuit had held last year that the bankruptcy court lacked the constitutional authority to determine whether purported trust assets were property of the debtor’s estate.
The U.S. Court of Appeals for the Third Circuit held on July 30, 2013, that a reorganized Chapter 11 debtor could reopen its closed case, enabling the debtor assignee to enforce a purchase option in a real property lease despite the lease’s “anti-assignment provisions.” In re Lazy Days’ RV Center Inc., 2013 WL 3886735, *5 (3d Cir. July 30, 2013).
The United States Court of Appeals for the Second Circuit recently vacated a decision by the District Court for the Southern District of New York, which had declined to enforce the contractual allocation of claim impairment risk between a bankruptcy claim buyer and its seller.[1] Relying on the plain language of the documents, the Second Circuit held in Longacre Master Fund, Ltd. v. ATS Automation Tooling Systems Inc. (Longacre)that the debtors’ objection to the claims had triggered the seller’s repurchase obligation.
On Aug. 30, 2011, the United States Bankruptcy Court for the Southern District of New York approved the disclosure statement with respect to the revised second amended joint Chapter 11 plan of Lehman Brothers Holdings Inc. and its affiliated debtors (the “Debtors”). The order approving the Debtors’ disclosure statement and establishing certain procedures related to the hearing to consider confirmation of the plan (the “order”) can be accessed here.
The current cycle of Chapter 11 corporate bankruptcies involves many cases where the debtor seeks to achieve a balance-sheet restructuring by converting debt into equity. When consensus cannot be achieved, junior stakeholders (i.e., second lien creditors, unsecured creditors and/or equity) will often contest plan confirmation on the grounds that the proposed plan provides more than 100% recovery to the senior creditors. Valuation plays the central role in these cases.
The United States Bankruptcy Court for the Southern District of New York entered an order on Sept. 17, 2009, granting a motion filed by Lehman Brothers Special Financing Inc. (“LBSF”) to compel Metavante Corporation (“Metavante”) to continue to make payments to LBSF under an ISDA Master Agreement.
The United States District Court for the Southern District of New York recently affirmed a bankruptcy court’s denial of Chapter 15 protection for the U.S. assets of two Cayman Islands hedge funds (the “Funds”) (previously reported in SRZ’s Sept. 19, 2007, Alert, “Cayman Hedge Funds Liquidators’ Request for Chapter 15 Protection Denied by Bankruptcy Court”). See Civ. Case No. 07-8730 (S.D.N.Y. May 27, 2008) (the “Decision”).