Undersecured creditors may breathe a little easier.  In a recent decision, the United States Bankruptcy Court for the Northern District of Illinois denied the debtors’ request to use an undersecured creditor’s cash collateral, in the form of postpetition rents, to pay estate professional fees, holding that the undersecured creditor was not adequately protected even though the value of its collateral was stable and possibly increasing.  

This case is the product of yet another dispute in the extensive, multi-billion dollar fraud perpetrated by Tom Petters. In 2005, as the sole board member of Petters Group Worldwide, LLC (“PGW”), Petters directed the acquisition of Polaroid, which operated independently and legitimately as a going concern. In late 2007 and early 2008, Polaroid and other Petters companies began experiencing financial difficulties. In January 2008, PGW approached Ritchie about a loan and the next day, Ritchie loaned $31 million to PGW to pay debts of Polaroid and PGW.

On May 30, 2014, hedge fund Moore Capital (Moore) brought suit against the Lehman Brothers bankruptcy estate (Lehman) in the Southern District of New York bankruptcy court, seeking a declaratory judgment that it acted properly when it terminated swap agreements and setoff termination amounts in the time between the filing of the parent company Lehman Brothers Holdings Inc. (LBHI) and the eve of bankruptcy filings weeks later of Moore’s Lehman counterparties¹.

In its opinion in Gray v. Warfield (In re Gray), 523 B.R. 170 (9^th Cir. BAP 2014), the Ninth Circuit BAP held that the U.S. Supreme Court’s decision in Law v. Siegel, 134 S. Ct. 1188 (2014) precludes a bankruptcy court from denying a debtor’s amendment of his claim of exemption on equitable grounds.

Risky Business. When a debtor is a licensee under a trademark license agreement, does it risk losing those license rights when it files bankruptcy? The question had not been answered in a Delaware bankruptcy case until Judge Kevin Gross recently addressed it in the In re Trump Entertainment Resorts, Inc. Chapter 11 case. A lot was riding on the decision, not just for the parties involved but, given how many Chapter 11 cases are filed in Delaware, more generally for other trademark licensees and owners as well.

Judge Drain’s recent bench rulings in Momentive Performance Materials in 2014 generated a great deal of controversy in the distressed debt world.  Distressed investors, lenders, and commentators have questioned whether the Momentive rulings will lead to an industry trend in which debtors seek to cram down their secured lenders to take advantage of the ability to do so at below market interest rates.  

This is a good ‘war story’ about getting paid.  The client was (and is) based in the European Union, and they sold product to the US market.  Their products were (and are) high-value, about $100,000+ per item. Not stuff I’d be able to buy, but I digress. The company insisted–strongly–on using their ‘home country’ terms and conditions of sale in the US, without thoroughly reviewing whether there was anything in the home country law that could adversely affect them in the US. We were not involved at that point.

The Supreme Court is currently considering the case of Wellness International Network, Ltd. v. Shariff.

The Superior Court for the County of Los Angeles for many years now has handled a busy asbestos docket with numerous cases proceeding through trial and many more resolved before a verdict is rendered.  The court handles cases brought by many prominent plaintiff firms with national presences.  It is therefore interesting to see this court follow the lead of other courts and various legislative bodies in preparing to mandate greater transparency regarding claims made to bankruptcy trusts.

Since the Supreme Court’s decision in Stern v.