Earlier this month, Avidity Partners, LLC ("Avidity"), in its role as claims agent for the bankruptcy estates of AbitibiBowater, Inc, et al ("Debtors"), began filing avoidance actions against various defendants. As alleged in the complaints, on April 16, 2009, Debtors filed petitions for bankruptcy with the United States Bankruptcy Court for the District of Delaware.

In PLR 201051019 (12/23/2010), the Service ruled that in computing a consolidated group’s §382 limitation after filing for bankruptcy relief, all of its outstanding liabilities before the ownership change should be taken into account at the adjusted issue price, regardless of whether the obligations were subsequently discharged in whole or in part during the recognition period.

Recently, several courts have added to the growing body of decisions construing intercreditor agreements in bankruptcy cases.

Reorganization or debtor-in-possession (“DIP”) financing has become an increasing source of litigation.

Summary

In a 13 page decision signed, April 11, 2011, Judge Carey of the Delaware Bankruptcy Court granted a motion disallowing a creditor’s late-filed bankruptcy claim, and held that if there is no legal requirement that a party respond to an affidavit, a lack of response does not bind a party to that affidavit nor can it be considered an admission by that party. Judge Carey’s opinion is available here.

Background

Washington Governor Christine Gregoire has signed into law a series of changes to the state Receivership Act that will make it easier (and possibly cheaper) for creditors to utilize the Receivership Act as a tool to resolve troubled loan situations with their borrowers. The revisions will become effective 90 days after the Legislature adjourns, making July 24, 2011, the likely effective date. The changes clarify a number of points that previously puzzled both judges and practitioners.

Creditors' Rights

In Hardesty v. CitiFinancial, Inc.,1 the Sixth Circuit affirmed the bankruptcy court’s denial of the trustee’s request to avoid the debtors’ mortgages with the creditor based on allegedly defective certificates of acknowledgement in the mortgage documents under Ohio law.

The latest numbers on bankruptcy filings in 2010 have been released, and 1.53 million Americans filed for bankruptcy protection last year, an increase of 9% over 2009’s figures. This number is the highest number of bankruptcy filings since the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) became law in 2005. In that year, 2 million Americans filed bankruptcy in order to file before BAPCPA’s restrictions on bankruptcy filings took effect.  

In re Passarella, 2011 Bankr. LEXIS 53 (2011)

The United States District Court for the Northern District of California, applying California law, has granted summary judgment in favor of a bankruptcy plan administrator for the estate of an insured, holding that the plan administrator is entitled to recover premiums paid to an insurer after the insurer rescinded the policy. In re SONICblue Inc., 2011 WL 839401 (N.D. Cal. Mar. 4, 2011). The court also held that the insurer is entitled to reimbursement for defense costs paid to the insured prior to the policy’s rescission.