In Acceptance Loan Co., Inc. v. S. White Transportation, Inc. (In re S. White Transportation, Inc.), 725 F.3d 494 (5th Cir. 2013) (No.
Two recent decisions may affect the assets of individuals available to satisfy creditors' claims in bankruptcy. In the first decision, the Bankruptcy Court for the Eastern District of New York determined that married, joint debtors received value in exchange for tuition payments and rejected the bankruptcy trustee's arguments that the tuition payments were fraudulent transfers.
Bankruptcy Court Decision
It is often said that the acid test of a security interest or lien on property is the bankruptcy of the property owner. If that person or entity files a bankruptcy petition, the bankruptcy trustee has a number of options to challenge or even avoid certain liens. A lien that is not properly perfected is subject to attack by a trustee under both the “strong-arm clause” (Bankruptcy Code § 544) and the preference provisions (Bankruptcy Code § 547). If the lien is avoided, the property can then be sold and the proceeds distributed to the unsecured creditors.
In another judicial decision springing from Lehman Brothers, as a result of the likely surplus in the estate of Lehman Brothers International (Europe) (in administration) (LBIE) after all the provable debts have been paid, Mr Justice Richards has issued a ‘statement of conclusions’ in what is called the Waterfall Application. A more detailed judgement is expected in late March 2014. We summarise the conclusions below.
Ranking and Contributions of Shareholders of Inlimited Companies
Many bank holding companies (BHCs) are beginning to face tough choices as the five-year interest deferral period on their trust preferred securities (TruPS) is coming to an end. Consider the following: on Feb. 10, 2014, First Mariner Bancorp, immediately following the end of its five-year interest deferral period on $52 million of TruPS, filed a voluntary Chapter 11 petition and announced its plans to sell its wholly owned subsidiary, 1st Mariner Bank, in a court-supervised Section 363 sale.
First published in LES Insights
A new decision in Ash v. North American Title Co. holds that (1) contract damages based upon a bankruptcy were not foreseeable, and (2) an escrow holder was entitled to a jury instruction as to intervening or superceding causes (i.e., the bankruptcy). The decision also highlights a potential for some judges to try to impose greater responsibilities on escrow holders.
On March 4, 2014, the United States Supreme Court decided Law v. Siegel, No. 12-5196. The Court held that the bankruptcy court violated the express terms of § 522 of the Bankruptcy Code when it ordered that the $75,000 protected by a debtor's homestead exemption be available to pay a trustee's attorney's fees as an administrative expense. The order exceeded the limits of the bankruptcy court's authority under § 105(a) of the Code and its inherent powers.