In Re: Katherine Elizabeth Barnet, No. 13-612 (2d Cir. Dec. 11, 2013) [click for opinion]

The Eighth Circuit held that preferential payments are subject to a new value defense of § 547(c)(4) where the new value was provided by a third party that benefitted from the preferential transfers.

Overnight Income Doesn't Float ERISA Plan's Boat.

On Feb. 11, the three private plaintiff- appellants and 11 state plaintiff-appellants in State National Bank of Big Spring et al. v. Jacob J. Lew et al. filed briefs with the U.S. Court of Appeals for the District of Columbia Circuit in their appeal of the district court’s decision that the plaintiffs lacked standing to challenge certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010).

Much to the chagrin of golf course lenders, bankruptcy and appellate courts around the country have consistently held that a properly-perfected mortgage or security interest in golf course revenues, including cart rentals and green fees, is not sufficient to grant the lender an interest in the golf course’s “cash collateral” if the business ends up in bankruptcy*. The result is that those revenues can be spent by the golf course borrower in the bankruptcy case to cover its administrative or operating expenses over the objection of the lender.

This morning the US Supreme Court issued a ruling providing that severance payments are taxable FICA wages. In United States vs. Quality Stores, Quality Stores made severance payments to employees who were involuntarily terminated as part of Quality Stores’ Chapter 11 bankruptcy. Quality Stores paid and withheld income and FICA taxes from the severance payments. Later, Quality Stores sought a refund on behalf of itself and former employees for FICA taxes withheld and paid.

On March 24, 2014, the U.S. Supreme Court issued its decision in United States v. Quality Stores, Inc.,No. 12-1408, holding that severance payments made to employees terminated in connection with a company's Chapter 11 bankruptcy plan are taxable wages under the Federal Insurance Contributions Act (FICA).

On March 19, 2014, the U.S. Court of Appeals for the Seventh Circuit decided Grede v. FCStone, LLC, Nos. 13-1232, 13-1278 (7th Cir. Mar. 19, 2014), an opinion that reinforces the importance of the portability of investment accounts carrying commodity customer funds. The Seventh Circuit held that commodity futures customer funds must be protected in an insolvency situation, and that the release of customer funds to meet margin obligations should be upheld at all costs.

On Monday, March 10, 2014, the companies that own and operate the Sbarro pizza chain, Sbarro LLC and 33 affiliates, filed for bankruptcy reorganization under Chapter 11 of the federal Bankruptcy Code.  The Sbarro companies operate 217 restaurants in the U.S. and there are 582 franchised restaurants, 176 in the U.S. and 406 at international locations.

What recourse is there for a plaintiff seeking to recover a debt when the defendant goes bankrupt during suit, and its owner commences operating essentially the same business through another legal entity?  Can successor liability be asserted and, if so, how?  Those issues played out in the recent case of Marange Printing, Inc. v. Finish Line NJ, Inc., et  al., Superior Court of New Jersey, Docket No. A-2735-12T2 (decided March 7, 2014).