Bankruptcy and insurance have been engaged in a tangled web for decades. Claimants against bankrupt insureds are often frustrated in seeking a recovery that they might otherwise obtain if the insured had not gone bankrupt. In a recent case, the Third Circuit addressed the standing of a default judgment creditor claimant to sue the bankrupt insured’s insurance company to recover the default judgment.
The Small Business Reorganization Act of 2019 (“SBRA”) became effective on February 19, 2020, after being enacted by Congress at blazing speed. Indeed, the legislation was first introduced into the House of Representatives on June 18, 2019, was received by the Senate on July 24, 2019 and was signed by the President on August 23, 2019. The SBRA is intended to help small businesses restructure their debts in bankruptcy more effectively.
In a unanimous decision written by Justice Neil Gorsuch (Rodriquez v. FDIC No 18-12690), the Supreme Court vacated a decision by the U.S. Court of Appeals for the Tenth Circuit (In reUnited Western Bancorp, Inc., 914 F. 3d 1262 (10th Cir, 2019)) that awarded a federal income tax refund of a failed bank to the Federal Deposit Insurance Corporation as receiver.
DELAWARE – The appellants are latent asbestos claimants who did not file by the bar date set by Chapter 11 bankruptcy but who were subsequently diagnosed with mesothelioma. The appellee is Energy Future Holdings Corporation (EFH), which was a holding company for several energy properties. Those subsidiaries became defunct long ago as a result of asbestos litigation. EFH also filed for bankruptcy as a result of vast sums of money owed to asbestos debtors. The reorganization plan called for a notice period to latent claimants followed by a subsequent bar date for claims.
The Small Business Reorganization Act of 2019 (“SBRA“) is in effect as of yesterday, February 19, 2020. The SBRA was enacted to provide smaller business debtors with a more streamlined path to restructuring their debts. Below are some highlights of the new law.
Absolute-Priority Rule
In Whirlpool Corp. v. Wells Fargo Bank, National Association (In re hhgregg, Inc.), (7th Cir. Feb. 11. 2020), the United States Court of Appeals for the Seventh Circuit held that the current enactment of the United States Bankruptcy Code (the “Bankruptcy Code”), specifically 11 U.S.C. §546(c), expressly subordinates a seller’s reclamation claim to the prior rights of a lienholder. This is good news for secured lenders.
On December 20, 2019, Congress passed the Setting Every Community Up for Retirement Enhancement Act (the "SECURE Act"), which codifies sweeping changes to rules governing distributions from your qualified retirement plan (such as a 401(k)) or IRA (together referred to as "retirement accounts"). The SECURE Act, which became effective on January 1, 2020, affects not only distributions during your lifetime, but also the way in which your retirement assets are distributed to your beneficiaries after your death.
Hogan Lovells Publications | 17 February 2020
"The Net Short": U.S. and European High-Yield Covenant Trends in Response to Net Short Activism
Key Notes:
The U.S. Court of Appeals for the Ninth Circuit recently affirmed the dismissal of a consumer’s Truth in Lending Act (TILA) claim for lack of subject matter jurisdiction, holding that the claim was barred by the jurisdiction-stripping provision of the federal Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).
A copy of the opinion in Shaw v. Bank of America is available at: Link to Opinion.