The US Bankruptcy Court in Massachusetts says default rates must be justified as a reasonable measure of damages at the time of the making of the loan and that a floating default rate that can exceed 5% will not be allowed as part of a creditors claim in the borrower's bankruptcy.    The loan was made in 2006 with a contract rate equal to prime at a time when the prime rate was below 13 percent.

Under Internal Revenue Code (“Code”) section 436, unless a defined benefit pension plan sponsored by a debtor in bankruptcy is fully funded, the plan may not make “prohibited payments” (i.e., lump sum payments or payments in any other form that exceed the monthly amount under a single life annuity). Moreover, the anti-cutback rule in Code section 411(d)(6) prohibits a plan from being amended to eliminate an optional form of benefit.

The intricacies of pursuing environmental claims against financially distressed parties

In a prolonged financial downturn, it is an even more difficult burden for many companies to shoulder their own environmental remediation requirements.Pollock’s article examines the steps to consider if a co-liable potentially responsible party (PRP) is either showing signs of economic distress or has already filed in bankruptcy.  

Large law firm failures typically produce lengthy and litigious bankruptcy cases. A frustrated lawyer in one such case succinctly described the essential problem: “the assets walk, talk and, worst of all, have their own counsel.” To the inherent tensions and creditor demands of any large chapter 11 case are added  the raw pain, similar to divorce, that many partners feel at the downfall of an institutio

The United States Court of Appeals for the Eleventh Circuit (the “Eleventh Circuit”) has reinstated the controversial 2009 decision of the United States Bankruptcy Court for the Southern District of Florida (the “Bankruptcy Court”) that required a group of lenders to disgorge $421 million as fraudulent conveyances under sections 548 and 550 of the Bankruptcy Code.

A federal court recently held that two investment funds are not jointly and severally liable for a bankrupt portfolio company’s withdrawal liability to a multiemployer pension plan disagreeing with a 2007 opinion by the Appeals Board of the Pension Benefit Guaranty Corporation (the “PBGC”). The Massachusetts U.S. District Court ruled there was no liability because the investment funds are not “trades or businesses” for purposes of ERISA’s joint and several liability rules.

Last month the drama surrounding Hostess’s efforts to reject various collective bargaining agreements drew to a close (pending appeal).  Bankruptcy Judge Robert Drain (in an unpublished decision) authorized Hostess to reject its existing CBAs with affiliates of the Bakery, Confectionery, Tobacco and Grain Workers International Union, and modify the terms of its expired CBAs with the Bakers’ Union on an interim basis.  The Bakers Union was the last of Hostess’s major unions holding out and refusing to accept modifications to its CBAs.  See Transcript of Hearing, In re Hoste

The New Jersey Appellate Court has recently ruled that a receiver can be sued for injuries sustained in a building under the receiver’s control.  The case involved a dilapidated apartment building in Passaic and injuries sustained thirteen months after the receiver was appointed by judge overseeing the foreclosure case of the first mortgage holder.  The receiver was charged with responsibility to collect rent; manage, insure and repair the premises; pay taxes and assessments; and “do all things necessary for the due care and proper management of the mortgaged premises.”  Acco

The United States District Court for the Eastern District of Virginia, applying Texas law, has held that a settlement agreement resolving coverage litigation released the insurer’s obligation for defense costs for certain claims tendered for coverage under a subsequent policy.  Nat’l Heritage Found., Inc. v. Philadelphia Indem. Ins. Co., 2012 WL 5331570 (E.D. Va. Oct. 25, 2012).

On July 10, 2012, the United States Bankruptcy Court for the Western District of Kentucky ruled that the Council on Occupational Education, Inc., the accreditor for Decker College, Inc., made factually erroneous statements to DOE. In re Decker College, Inc., Case No. 05-61805 (W.D. Ky. July 10, 2012), Dkt. 198 at 18. Specifically, the Court found that the accreditor had falsely informed DOE that Decker College had not been accredited to offer distance education programs.