In In re Lehman Brothers Holdings Inc., the U.S. Court of Appeals for the Second Circuit recently affirmed that claims filed by Lehman employees on account of restricted stock units (“RSUs”) are subject to subordination under section 510(b) of the Bankruptcy Code.

In order to file for bankruptcy in the United States, a company needs to secure the appropriate corporate authorizations as required by its governing documents. What happens when a debtor does not obtain appropriate authorization to file its bankruptcy case? Recently, the Bankruptcy Court for the Northern District of West Virginia held in In re Tara Retail Group, LLC that an improper bankruptcy filing can be ratified when those who are required to authorize the filing remain silent.

Background

In In re Lehman Bros. Holdings Inc. 855 F.3d 459 (2d Cir. 2017), the United States Court of Appeals for the Second Circuit affirmed a district court order subordinating the claims of former Lehman Bros.

(B.A.P. 6th Cir. June 20, 2017)

Permissive Abstention:

On April 3, 2017 the Suffolk County Supreme Court granted Nationstar Mortgage LLC’s motion for summary judgment to recover defaulted mortgage payments in a potentially trailblazing foreclosure decision.  Nationstar Mortgage LLC v. MacPherson, 2017 NY Slip Op 27120 (Sup. Ct. Suff. Co.

Section 363 of Title 11 of the United States Code (“Bankruptcy Code”) authorizes trustees (and Chapter 11 debtors-in-possession) to use, sell, or lease property of a debtor’s bankruptcy estate outside of the ordinary course of business upon bankruptcy court approval. Some of the key benefits for purchasers are the ability to purchase assets free and clear of liens under Section 363(f) and obtain protections from adverse consequences of any appeal under Section 363(m).

SNDA Basics

A subordination, nondisturbance and attornment agreement (“SNDA”) is commonly used in real estate financing to clarify the rights and obligations between the owner of rental property (i.e., the borrower), the lender that provides financing secured by the property, and the tenant under a lease of the property in the event the lender forecloses or otherwise acquires title to the property. As suggested by its name, an SNDA has the following three primary components:

TK Holdings, Inc., a subsidiary of Takata Corporation, and eleven (11) of its subsidiaries and affiliates have filed petitions for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Lead Case No. 17-11375).

The U.S. Bankruptcy Court for the Southern District of Florida recently held that a bankruptcy debtor’s Chapter 11 proceeding should not be dismissed as filed in bad faith to delay or avoid foreclosure, but could not confirm the debtor’s proposed plan to lease its commercial property asset to a business that generates income from medical marijuana.