Can an equity investor who directs an insider to contribute "new value" to a debtor under a plan of reorganization, so as to retain his interest in the company, avoid an express market test for that new equity? The answer to that question is a resounding "no," according to Chief Judge Easterbrook of the Seventh Circuit Court of Appeals in In re Castleton Plaza, LP, Case No. 12 Civ. 2639, 2013 WL 537269 (7th Cir. Feb. 14, 2013).
On January 31, 2013, the Bankruptcy Court for the District of Delaware confirmed the debtors’ proposed plan of reorganization in In re Indianapolis Downs, LLC,1 declining to “designate” or disallow the votes of several substantial creditors that had entered into a plan support or “lockup” agreement with the debtors after the bankruptcy filing. In a written decision,2 the Bankruptcy Court provided important guidance concerning the permissibility of post-petition plan support agreements entered into before the court approves a disclosure statement.
Numerous public-private partnerships have been formed in recent years as a device for funding infrastructure projects such as ports, toll roads and other transportation projects, sewer systems and parking garages. State and local governments, which have been strapped for cash to spend on infrastructure projects, have granted private entities the right to operate various infrastructure projects in exchange for a significant up-front payment and/or periodic payments.
The U.S. Court of Appeals for the Seventh Circuit, on Feb. 14, 2013, held that an insider of a Chapter 11 partnership debtor cannot avoid the “competition rule” in a new-value reorganization plan. The debtor’s equity owner arranged for his wife, also an “insider,” to contribute new value to obtain the equity of the reorganized debtor. In re Castleton Plaza, LP, — F.3d –––, 2013 WL 537269 at *1 (7th Cir., Feb. 14, 2013).
A recent ruling in the American Airlines bankruptcy case enforcing an automatic acceleration upon bankruptcy provision serves as a reminder that the enforceability of so-called ipso facto provisions in debt instruments remains an unsettled, forum-dependent question.
Public policy in New York prompted the establishment of, and recent increase to the Homestead Exemption (the “Exemption”), codified in the CPLR at §5206. The Exemption, a statutorily created right, affords property owners (and their surviving heirs) certain protections from a creditor’s right to levy against a judgment debtor’s real property for the purpose of satisfying a personal money judgment. The rationale behind the need for the Exemption is to ensure that a property owner is not left wholly insolvent once his primary residence is taken from him.
A recent decision in the protracted litigation by lenders of Extended Stay to recover under guaranties executed by owners of Extended Stay highlights the need for clear and unambiguous drafting in intercreditor agreements.
On occasion, an owner files a chapter 7 bankruptcy during or in connection with an association’s foreclosure. While that chapter 7 bankruptcy may slow that foreclosure, it will absolutely not end it. A chapter 7 bankruptcy ‘stays’ that foreclosure, sure. That chapter 7 bankruptcy stay remains in effect with respect to “property of the estate” until it that property (the unit) is no longer property of the estate. During the course of a chapter 7 bankruptcy, the bankruptcy trustee eventually ‘abandons’ the property of the estate. Once that ‘abando
Official committees of unsecured creditors (Committees) serve a vital role in protecting the rights of the general unsecured creditors during a chapter 11 bankruptcy case.
A long-struggling company’s failure to issue written notice to its employees 60 days in advance of shutting down operations, as required by the Worker Adjustment and Retraining Notification (“WARN”) Act, is excused by the Act’s “unforeseeable business circumstances” exception, the federal appeals court in New Orleans held. Angles v. Flexible Flyer Liquidating Trust, 2013 U.S. App. LEXIS 2850 (5th Cir. Feb. 11, 2013).