Many of us in the restructuring industry worked on Chapter 9 matters in the late 80’s and early to mid-90’s. Some were involved in large, exotic matters like Orange County, California. Most of us earned our stripes in repairing the state of affairs for numerous, smaller municipal improvement districts, levy improvement districts, road districts, and the like, both in and out of court. Recently, the City of Detroit caught a lot of attention in what appears to have been a successful restructuring.

Key Tool for Non-Bankrupt Licensees 

 SEIU-Texas (formerly known as SEIU Local 5) may have pushed its anti-employer corporate campaign too far in 2007, when it alleged publicly that a non-union Texas janitorial contractor systematically failed to pay its employees for all hours worked and instructed janitors to work off the clock. The employer, Professional Janitorial Servicing of Houston, Inc., sued the union in state court for defamation, and in September 2016 won a jury verdict of $5.3 million in lost profits and $2.5 million in pre-judgment interest.

The U.S. Court of Appeals for the First Circuit recently rejected a bankruptcy trustee’s effort to avoid a mortgage on the basis that the acknowledgment signed by the borrowers’ attorney-in-fact was defective under Massachusetts law, holding that the acknowledgment was not materially defective because as a matter of agency law the attorney-in-fact’s signature was the borrowers’ “free act and deed.”

From time to time, you may be seeing references to the Uniform Voidable Transactions Act (UVTA). Indeed, since 2014, the law has already been enacted in nine states and introduced in another seven states. If you are wondering what this new law is all about, you should know that it is really a very old law with a new name. The crux of the law is to prevent debtors from escaping their creditors by making transfers of assets to avoid paying their debts. This law has been a key part of debtor-creditor law in the United States and England dating back to the time of the reign of Elizabeth I.

The receipt of make-whole premiums, including during a bankruptcy after acceleration of the notes, is of paramount importance to noteholders. Decisions in some recent cases in New York and Delaware bankruptcy and federal district courts have held that note purchase agreements or indentures must include an express agreement that the make-whole premium (or similar prepayment premium) is payable upon acceleration (rather than prepayment) after the filing of a bankruptcy proceeding. In the recent Momentive decision (In re MPM Silicones, LLC), for example, the U.S.

In a recent case arising out of the bankruptcy of the Yellowstone Mountain Club, a private ski club for the ultrawealthy, Blixseth v. Brown (In re Yellowstone Mountain Club, LLC) (9th Cir. Nov. 28, 2016), the Ninth Circuit held that plaintiff needed the bankruptcy court’s permission to bring post-petition claims against the chair of Yellowstone’s Unsecured Creditors Committee (“UCC”).

On November 21, 2016, in a case entitled In re Monson,1 the Eleventh Circuit Court of Appeals affirmed the Bankruptcy Court's decision,2 which held that a debtor's conduct constituted a willful and malicious injury to a creditor within the meaning of 11 U.S.C. 523(a)(6), because the debtor injured the creditor's right to recover its loan, the injury was intended, and the debtor was conscious of his wrongdoing. Thus, the debt was nondischargeable under 523(a)(6).

Exceptions to the Dischargeability of Debt under Section 523 of the Bankruptcy Code

In a recent decision in the Southern District of New York, the court addressed a challenge to a secured-for-unsecured debt exchange offer that raised and answered a host of questions on the potential vulnerability of offers of this type. In Waxman v. Cliffs Natural Resources (SDNY December 6, 2016), the court dealt with standing to pursue a challenge; TIA §316(b) after Marblegate and MeehanCombs/Caesars; the no-action clause and allegations of conflict of interest of the trustee; the remedies clause; and discrimination against non-QIBs.

On Nov. 17, 2016, the United States Court of Appeals for the Third Circuit issued an important decision in favor of holders of more than $4 billion in secured first and second lien notes issued by Energy Future Intermediate Holding Co. LLC (EFIH), which unwillingly had their secured notes repaid ahead of schedule in bankruptcy without payment of the “make-whole” required under the indentures. In re Energy Futures Holding Co., No. 16-1351 (3d Cir. Nov. 17 2016).