Editor’s Note: On June 16, 2016, The Bankruptcy Cave gave you our previous summary of the controversial Sabine decision.
Recent Developments in Acquisition Finance
In this post-Stern opinion (the “Opinion”), the United States District Court for the District of Delaware (the “Court”) addresses two main issues with respect to the approval of nonconsensual third-party releases provided for in a chapter 11 plan of confirmation, namely whether a Bankruptcy Court has (1) subject matter jurisdiction to approve, and (2) the constitutional authority to grant such releases. Opinion at 2.
The Supreme Court of Indiana recently confirmed a mortgagee’s ability to seek an in rem judgment against property for which there was an outstanding lien balance after the borrowers obtained a discharge of their Chapter 7 bankruptcy.
In so ruling, the Court distinguished the difference between an in rem and in personam judgment, and rejected the borrowers’ unsupported argument that the debt was paid in full by the time the mortgagee initiated foreclosure proceedings against the borrowers.
The U.S. Court of Appeals for the Fifth Circuit recently held that the collection of garnished wages earned during the 90 days prior to the filing of a bankruptcy petition is an avoidable transfer, even if the garnishment was served before the 90-day preference period.
The ruling creates a potential split with the Second, Seventh, and Eleventh Circuits, with the Fifth Circuit joining with the Sixth Circuit on the issue.
The Bankruptcy Court for the District of Delaware recently held in the bankruptcy proceedings of Nortel Networks Inc., et al. (“Nortel”), Case No. 09-10138 (KG), that it would not second guess the work of an indenture trustee and its counsel on matters related to the trustee (i) in its capacity as indenture trustee on behalf of noteholders; (ii) in its capacity as a member of a creditors’ committee; and (iii) in defending its fees.
Kansas-based Payless, Inc. filed for Chapter 11 bankruptcy protection in the Eastern District of Missouri (St. Louis) on Tuesday afternoon, under docket # 17-42257.
The insolvent trading "safe harbour" and "ipso facto" clause reform
The key points
Last week, the federal government circulated an exposure draft of the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill (the Bill). The Bill is intended to promote entrepreneurship and innovation among directors of companies facing insolvency - this is to be achieved through two fundamental changes to existing insolvency laws.
A U.S. House of Representatives Bill would amend the Bankruptcy Code to establish new provisions to address the special issues raised by troubled nonbank financial institutions.
On March 23, 2017, the U.S. Bankruptcy Court for the Southern District of Florida (the “Court”) issued an opinion in the chapter 15 case of Banco Cruzeiro do Sul, S.A., a Brazilian bank (“BCSUL” or the “Debtor”), holding, among other things, that section 1521(a)(7) of the Bankruptcy Code does not prevent foreign representatives from commencing state law fraudulent conveyance actions. See Laspro Consultores LTDA v. Alinia Corp. (In re Massa Falida Do Banco Cruzeiro Do Sul S.A.), No. 14-22974-BKC-LMI, Adv. Pro. No. 16-01315-LMI, 2017 WL 1102814 (Bankr. S.D. Fla.