Last Friday, the Sixth Circuit postponed oral argument in some of the pending cases in the appeal from the bankruptcy judge’s decision that Detroit was entitled to creditor protection under Chapter 9 of the U.S. Bankruptcy Code and could try to alter the terms of workers’ pensions. The postponement was apparently granted to allow various pension groups to settle with the city.
The Senate begins debate today on a bill to prevent the insolvency of the Highway Trust Fund. The bill, already passed by the House and supported by the White House, provides the best chance for Congress to prevent the projected insolvency given the upcoming August recess. Although the Senate is considering four amendments to the bill, under the short time frame before recess and the urgency to pass a stopgap measure, the bill is likely to pass without amendment so that it will not have to return for another vote in the House.
ON THE HILL
The United States District Court for the District of Delaware, on July 21, 2014, held that an indenture trustee’s late filing of senior claims did not waive the lenders’ contractual subordination rights, reversing the bankruptcy court. In re Franklin Bank Corporation, 2014 U.S. Dist. LEXIS 98327 (D. Del. July 21, 2014). Nor did the senior trustee’s late filing show inequitable conduct warranting equitable subordination of the tardily filed senior claims to timely filed junior claims.
Section 506(a)(1) of the Bankruptcy Code provides common-sense instruction that the allowed amount of a secured claim is equal to the value of the collateral securing the claim and that a claim is unsecured to the extent the claim exceeds such collateral value. The section goes on to provide that the value of collateral ”shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on
House bill H.R. 2533 was introduced three years ago with much fanfare by the then Chairman of the House Judiciary Committee. H.R. 2533 proposes amending “title 28 of the United States Code with respect to proper venue for cases filed by corporations under chapter 11 of title 11 of such Code.” It is intended to reduce the number of jurisdictions available for filing a bankruptcy case by effectively eliminating a debtor’s “place of incorporation” as a venue option.
As we expected might happen in light of the Court’s previous order, the parties in the Detroit bankruptcy appeal agreed to postpone oral argument. In a letter to the parties, however, Judge Gibbons wrote that the appeals should be resolved before near the beginning of the hearing on the confirmation
Lewis Bros. Bakeries, Inc. v. Interstate Brands Corp. (In re Interstate Bakeries Corp.)