On March 22, 2010, in a 2-1 decision, the Court of Appeals for the Third Circuit held that a debtor may proceed with an auction sale under a Chapter 11 plan without providing a secured lender the right to credit bid for its collateral.
On March 24th, the Sixth Circuit joined seven other federal appellate courts in holding that negative equity is included in a creditor's purchase money security interest and is not subject to a bankruptcy court's cramdown authority under Chapter 13 of the Bankruptcy Code. Nuvell Credit Corp. v. Westfall.
On April 1st, the FDIC closed on a sale of an equity interest in a limited liability company (LLC) created to hold certain assets transferred from 19 failed bank receiverships. The purchaser of the interest in the Multibank Structured Transaction Single Family Residential 2010-1 is Roundpoint Mortgage Servicing Corporation. The sale was conducted through a competitive auction held on February 24, 2010. Nine different qualified groups submitted bids to purchase either a 50% leveraged ownership interest or a 20% unleveraged ownership interest in the newly formed LLC.
Equipment maker, Xerium Technologies, filed chapter 11 petitions for bankruptcy on March 30th in the United States Bankruptcy Court for the District of Delaware.
A Mississippi Bankruptcy Court recently addressed several employer defenses to liability under the Worker Adjustment and Retraining Notification Act (“WARN Act”), which is noteworthy in the context of the current economy. In re FF Acquisition Corp. d/b/a Flexible Flyer, 423 B.R. 502 (Bankr. N.D. Miss. January 20, 2010).
In an unusual decision, the U.S. Bankruptcy Court for the Southern District of Texas found that emailing hyperlinks directing others to view a third-party’s blog is a sufficient “publication” to sustain a defamation claim under state law.
On February 3, 2010, the California Supreme Court denied review of a significant decision by the California Court of Appeal, Sixth Appellate District, that limits a breach of fiduciary duty action brought by creditors against directors of an insolvent corporation under California law. Berg & Berg Enterprises, LLC v. Boyle, et al., 178 Cal. App. 4th 1020 (2009). California has now joined Delaware in holding that directors do not owe creditors a fiduciary duty, even when the corporation is operating in the so-called “zone of insolvency.”
The Commodity Futures Trading Commission has amended its bankruptcy rules (17 C.F.R. Part 190) to create a new “account class” for cleared over-the-counter (OTC) derivatives for purposes of calculating customer “net equity” and “allowed net equity” in the event of the bankruptcy of a futures commission merchant.
A hotel property derives much of its value from its operator and brand. When a hotel owner is in distress with respect to its loan obligations, the operator also plays a critical role in the resolution of the workout process between the owner and the lender. The rights and obligations of the operator contained in its agreements with the owner and the lender affect any workout decision that the parties may make.
One's Crisis is Another's Opportunity: Section 363 Sales With the increasing numbers of companies which were once thought to be giants of industry filing for bankruptcy, more opportunities to purchase major assets are becoming available to savvy buyers looking to expand their business or asset base. The Bankruptcy Code provides debtors with the ability to liquidate all or a part of their assets through court-supervised sales and buyers with the ability to obtain those assets at more favorable prices than they would pay if the sale were consummated outside of a bankruptcy.