Late last week, Judge Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York heard arguments from a number of parties regarding whether the New York bankruptcy court is the proper venue for Patriot Coal Corporation’s bankruptcy cases. In re Patriot Coal Corp., Case No. 1:12-bk-12900. Judge Chapman did not rule on the venue question from the bench. Instead, the parties will wait for a ruling while proceeding with the bankruptcy case.
On September 14, the Sixth Circuit affirmed the trial court's finding that a failed bank's parent did not make a capital maintenance commitment to the bank. After the parent filed for bankruptcy, the FDIC was appointed receiver for the bank. The FDIC then sought payment from the parent under the statute requiring a party seeking reorganization to fulfill commitments to maintain the capital of an insured depository institution.
In 2012, several judicial opinions have reminded directors, officers and “responsible persons” that personal liability may be imposed for business taxes. See our alert from June 20, 2012. Responsible persons are reminded again that not only will authorities impose liability for unpaid taxes of a business on individuals but that the imposition of such taxes may not be dischargeable in bankruptcy.
Jeffrey Marks, a partner in the Vorys Cincinnati office and a member of the commercial and finance group, authored this column about the decision from U.S. Court of Appeals for the Sixth Circuit in Onkyo Electronics V. Global Technovations. The column originally appeared in the September 17, 2012 edition of Bankruptcy Law360.
Case Study: Onkyo Electronics V. Global Technovations
The United States Court of Appeals for the Third Circuit recently reiterated its position that the doctrine of equitable mootness should only apply if granting relief on appeal would undermine a consummated bankruptcy plan. In In re Philadelphia Newspapers, LLC, the Third Circuit held that the United States District Court for the Eastern District of Pennsylvania abused its discretion when summarily finding that the appeal at issue was equitably moot simply because the appellants failed to seek a stay and the debtors’ plan had been substantially consummated.
California’s AB 506 process was intended to help a municipality in restructuring its debt obligations and avoid bankruptcy. However, the lessons of the bankruptcies of the City of Stockton, the Town of Mammoth Lakes and the City of San Bernardino support the reality that a meaningful restructure requires material involvement by the major stakeholders. California’s recent wave of municipal bankruptcies tend to show that the AB 506 process has not changed this reality, but rather made a difficult process longer and more arduous.
On September 7, the Sixth Circuit Court of Appeals issued a decision (United States v. Quality Stores, Inc.) holding that certain severance payments are not "wages" subject to Federal Insurance Contributions Act (FICA) tax, and upheld a bankruptcy court’s decision ordering a full refund of more than $1 million of FICA taxes paid by an employer with respect to severance payments it made to employees whose positions were eliminated in connection with the bankruptcy.
The Second Circuit Court of Appeals, acting with unusual alacrity (oral argument was heard only one month ago), summarily reversed the district court decision in Longacre Master Fund v.
Indiana Code Section 32-28-3-9, often referred to as the Personal Liability Notice (PLN) Statute, provides a means for subcontractors, equipment lessors, and laborers to assert a claim against a project owner for amounts owed for labor and material on a construction project. Essentially, the PLN Statute provides a means to assert a lien against funds the owner would otherwise pay to a general contractor, as contrasted to asserting a mechanic’s lien claim against real estate.