One of the effects of commercial globalization is that the bankruptcy filing of a debtor with transnational business relationships will sometimes result in a clash between the substantive bankruptcy laws of different countries.  A frequent question is whether the bankruptcy laws of a foreign country should be brought to bear upon creditors located in the United States, even where foreign bankruptcy law is at odds with the laws of the United States. 

In a decision of significance to the distressed claims trading community, the US Court of Appeals for the Third Circuit in In re KB Toys Inc.[1] recently held that any risk or “cloud” of disallowance under the Bankruptcy Code resulting from a creditor’s receipt of an avoidable transfer cannot be separated from a claim, even when such claim is in the possession of a subsequent transferee.

On Tuesday, December 2, 2013, Judge Steven Rhodes of the Eastern District of Michigan ruled that the City of Detroit, which filed for Chapter 9 bankruptcy protection in the U.S. Bankruptcy Court on July 18, 2013, met the specific legal criteria required to receive protection from its creditors and thus could formally enter bankruptcy.  The district court further determined that the city’s obligation to pay pensions in full was not "untouchable" while working and negotiating with creditors in restructuring its debt.

A recent Third Circuit reversal paves the way for Fair Debt Collection Practices Act (FDCPA) lawsuits based on minor procedural mishaps in bankruptcy court. This contradicts the law in the Second and Ninth Circuits and in many district and bankruptcy courts that previously have found that participation in bankruptcy proceedings is not an attempt to collect a debt and thus not grounds for an FDCPA claim.   

Based on progress to date, a Model Act on Appointment and Powers of Real Estate Receivers may be making its way to a state legislature near you within the next couple of years.  The Committee appointed by and representing the National Conference of Commissioners on Uniform State Laws to prepare the model act met again in late September, 2013, to review the latest working draft of the

My how time flies in protracted bankruptcy litigation. More than four years ago, as I reported back at the time, the Bankruptcy Court in the Chapter 15 cross-border bankruptcy case of Qimonda AG issued its first decision on the application of Section 365(n) in that case. After an initial appeal, a four-day trial on remand, and another appeal, last week the U.S.

In re American Roads LLC, et al., 496 B.R. 727 (S.D.N.Y. 2013

CASE SUMMARY

An ad hoc committee of bondholders who executed an agreement with a monoline insurer securing claims under an insured unitranche containing a “no action” clause, bargained away their right to appear in the debtor’s bankruptcy case and, therefore, lacked standing to object to the debtor’s chapter 11 plan.

FACTUAL  BACKGROUND

In re Investors Lending Group, LLC, 489 B.R. 307 (Bankr. S.D. Ga. 2013)

CASE  SNAPSHOT

The secured lender was judicially estopped from objecting to the valuation of parcels of land that the debtor proposed to surrender to the secured creditor through its plan of reorganization because the debtor used the valuations provided by the secured lender’s appraiser.

FACTUAL  BACKGROUND

In Anderson v Krafft-Murphy Co. Inc., 2013 Del. LEXIS 597 (Del. Nov. 26, 2013), the Delaware Supreme Court held that Sections 278 and 279 of the Delaware General Corporation Law, 8 Del. C.