Tenth Circuit holds that Canadian nationals who conspire to commit a breach of fiduciary duty against a Delaware corporation operating exclusively in Oklahoma are subject to personal jurisdiction in Oklahoma despite their lack of physical contact with the state. Canadian law firm alleged to have assisted the conspirators is not, however, subject to personal jurisdiction.
In In re Eastman Kodak Co., 495 B.R. 618 (Bankr. S.D.N.Y. 2013) (No. 12-10202), the Bankruptcy Court for the Southern District of New York permitted a Chapter 11 debtor-in-possession (Kodak) to assign a previously assumed real estate lease despite the lease’s anti-assignment clause.
The Third Circuit recently held that claims purchased from trade creditors by a claims trader will be disallowed under section 502(d) of the Bankruptcy Code when the seller of the claim received, and did not repay, a preference. In doing so, the United States Court of Appeals for the Third Circuit expressed its disagreement with a relatively recent decision in the United States District Court for the Southern District of New York which reached the opposite conclusion.
In a recent decision, the Court of Appeals for the Third Circuit (the “Third Circuit”) affirmed1 the bankruptcy court’s decision in In re KB Toys, Inc.,2 and held that a claim that is subject to disallowance under section 502(d) of the Bankruptcy Code in the hands of the original claimant is similarly disallowable when that claim is held by a subsequent transferee because the section is applicable to “claims” rather than “claimants.” This holding is in contrast to a prior decision of the District Court for the Southern District of New York in
Due to inconsistent decisions in the Second Circuit and Third Circuit, there has been some uncertainty as to whether a purchaser of a bankruptcy claim is subject to defenses that a debtor would have against the original creditor. Recently, this issue was settled with respect to cases filed in the Third Circuit.
Florida’s Use of Judicial Estoppel
In a recent decision by the influential Third Circuit Court of Appeals, In re KB Toys Inc., 2013 U.S. App. LEXIS 23083 at *17 (3d Cir. Nov. 15, 2013), the Court decided that “the cloud on the claim” stemming from a preferential payment made to the original claimant continues with the claim, which then could be disallowed.
A New York state trial court has held that plaintiffs alleging asbestos injuries may bring suit against a dissolved and liquidated New Jersey corporation and may effectuate service of process on the dissolved corporation by serving the corporation’s insurer. Germain v. A.O. Smith Water Products Co., No. 190281/12, 2013 WL 6065986 (N.Y. Sup. Ct. Oct 23, 2013).
CR&B Alert
Commercial Restructuring & Bankruptcy News
In This Issue:
• Consequences of the Failure of a Secured
Creditor to File a Timely Proof of Claim—2
• Private Equity Funds Potentially Liable for
Portfolio Company’s Unfunded Pension
Liability—2
• Make-Whole Payment Not ‘Unmatured
Interest’—3
• Tax Status of Q-Sub Debtor Not Estate
Property; Debtor Has No Standing to Challenge
Parent’s Sub-S Revocation—3
• Don’t Let Excess Insurers Avoid Coverage
Based on Settlements or Bankruptcy—4
On October 7, 2013, the United States Supreme Court refused to review a Seventh Circuit decision1 in the Castleton Plaza, LP case, which held that a new value plan proposed by the debtor in which an equity-holder’s spouse would provide a cash infusion to the debtor in exchange for 100 percent of the reorganiz