Under section 523(a)(2)(B) of the Bankruptcy Code, a debtor can discharge a debt obtained by a false statement “respecting the debtor’s financial condition,” as long as that false statement was not made in writing. On June 4, 2018, in Lamar, Archer & Cofrin, LLP v. Appling, the U.S. Supreme Court held that an oral statement about a single asset may constitute such a statement, and therefore comes within section 523(a)(2)(B)’s exception. The provision does not, the Court held, require a statement about the debtor’s overall financial state.

In yet another of the many cases against Residential Mortgage Backed Securities (RMBS) trustees for their alleged responsibility for losses suffered by investors, Judge Jesse Furman of the Southern District of New York precluded inquiry into the conduct of the trustee where a bankruptcy plan intervened. The plaintiffs were caught in a bind. Alleging misfeasance by the trustee prior to the commencement of the bankruptcy case would have been barred by the statute of limitations. Allegations of misfeasance subsequent to the commencement of the case were swept away by confirmation of the plan.

The Supreme Court of Wisconsin recently held that claim preclusion does not bar a mortgagee from proceeding with a foreclosure complaint despite a prior litigation which resulted in a dismissal with prejudice if the subsequent litigation is based upon a default and acceleration which occurred after the initial foreclosure proceeding.

In the first article of this two-part series on sell-side opportunistic engineering in the CDS market, we surveyed a number of strategies that could be used by sellers of CDS protection to create sell-side gains. In this second part, we analyze two recent situations where a proposed refinancing dramatically affected the CDS market for the reference entity because of the reduction in the sell-side risk. Although these cases may or may not have been driven by CDS considerations, they illustrate how sell-side CDS strategies may be effectively implemented.

Over the past few years, the CDS market has seen an increase in activism and the evolution of creative refinancing and restructuring strategies intended to achieve particular outcomes in the CDS market.

As an officer of the court every attorney is held accountable to the standards set forth in the Rules of Professional Conduct. In bankruptcy court, attorneys are held to additional standards set forth in local bankruptcy law. A violation of the rules can result in harsh sanctions as attorney Richard Gates discovered in In re Gates, Misc. Case No. 18-00301-KRH (Bankr. E.D. Va. Apr. 5, 2018).

The bankruptcy of Energy Future Holdings has spawned numerous decisions in the various segments of its Chapter 11 case. Yet another such decision was handed down by the U.S. District Court for the District of Delaware in March of this year, in which the court addressed the question of what constitutes collateral, and proceeds of collateral, in a complex Chapter 11 reorganization.

The U.S. Court of Appeals for the Ninth Circuit held that a party with a pecuniary interest affected by a bankruptcy court order satisfies the “person aggrieved” requirement for appellate standing even where the party fails to appear and object in the bankruptcy proceeding.

Accordingly, the Ninth Circuit reversed the district court’s dismissal of the appeal for lack of standing and remanded the case.

On May 22, 2018, the United States Court of Appeals for the Fifth Circuit issued its decision in Franchise Services of North America v. United States Trustees (In re Franchise Services of North America), 2018 U.S. App. LEXIS 13332 (5th Cir. May 22, 2018). That decision affirms the lower court’s holding that a “golden share” is valid and necessary to filing when held by a true investor, even if such investor is controlled by a creditor.

Just last month, the Bankruptcy Cave reported upon a Southern District of Texas case in which a debtor was denied discharge of a debt owed to an old (and likely former!?!) friend from church who had been required to pay off a student loan made to the debtor which the friend had guaranteed. Today we report another case involving friends and family and non-dischargeable student debt from the U.S.