The Detroit Institute of Arts was ready: the museum released a statement immediately after the Bankruptcy Court’s ruling today that Detroit is eligible for Chapter 9 Bankr

On November 15, 2013, the United States Bankruptcy Court for the Southern District of New York (Glenn, J.) issued a lengthy decision¹ in the Chapter 11 case of Residential Capital, LLC (“ResCap”). An important holding contained in this decision is that the bankruptcy claims of holders of notes issued with original issue discount (or OID) for tax and accounting purposes in a “fair value” exchange (an exchange for notes with a lower face amount) need not be reduced by any unaccreted OID^.2  

Just after the Bankruptcy Court held that Detroit is indeed eligible for Chapter 9 bankruptcy, Emergency Manager Kevyn Orr reiterated that he expects the Detroit Institute of Arts to contribute financially to the city’s plan to emerge from insolvency.  Said Orr, “We’d like to find a way to monetize the DIA.” 

In In re KB Toys Inc.,¹ the US Court of Appeals for the Third Circuit affirmed the holdings of the lower courts that claims subject to disallowance under Section 502(d) of the Bankruptcy Code are “similarly disallowable in the hands of the subsequent transferee.” According to the Third Circuit, when a creditor owes property to the estate, until that property is returned to the estate, that creditor’s claim, regardless of who holds it, is impaired, and the subsequent sale of that c

Upon learning that its borrower has filed a case under chapter 11 of the Bankruptcy Code,  a secured lender may decide not to participate in that case. The lender may want to ignore the bankruptcy case in order to avoid the expense of retaining bankruptcy counsel, or, relying on the general rule that liens pass through bankruptcy unaffected,  may simply prefer to wait until the chapter 11 case ends and then enforce its lien. In a recent Fifth Circuit Court of Appeals decision, Acceptance Loan Company, Incorporated v.

A ruling handed down by the Third Circuit Court of Appeals on November 15, 2013, adds yet another chapter to the ongoing controversy concerning whether sold or assigned claims can be subject to disallowance under section 502(d) of the Bankruptcy Code on the basis of the seller’s receipt of a voidable transfer. The decision—In re KB Toys Inc., 2013 WL 6038248 (3d Cir. Nov. 15, 2013)—is an unwelcome missive for claims traders. For the first time since the enactment of the Bankruptcy Code in 1978, a circuit court of appeals has concluded that:

On 8 October 2013, the Supreme Court of Vietnam released the most recent draft of the new Law on Bankruptcy ("Draft Bankruptcy Law"). The Draft Bankruptcy Law is now open for comments and, once passed by the National Assembly, will replace the current Law on Bankruptcy 2004 ("Current Bankruptcy Law").

The Draft Bankruptcy Law appears generally to be a positive step in Vietnam's efforts to improve the efficiency of the bankruptcy process and efforts to enhance the credibility of the legal framework for restructuring.

Conduct of Bankruptcy Proceedings

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.