San Bernardino County is now considering a plan to use eminent domain to restructure mortgages that are underwater. If the proposed plan is enforced, many investors could face significant losses if their loans are seized. Michael A. Sweet discussed San Bernardino County’s financial situation with American Banker..
Congratulations! You just successfully negotiated a prepackaged chapter 11 plan of reorganization for a multi-billion dollar enterprise which leaves general unsecured creditors unimpaired and has been unanimously approved by the debtors' creditors. It's smooth sailing from here, right?
On June 22, 2012, Judge Robert E. Gerber of the United States Bankruptcy Court for the Southern District of New York granted the U.S. Trustee’s motion to transfer the chapter 11 cases of Houghton Mifflin Harcourt Publishing Company and its affiliates to a different venue, notwithstanding the fact that the debtor’s prepackaged plan had been confirmed with unanimous support from its creditors, the cases were projected to conclude within 30 days of filing, and the debtors’ primary creditor constituencies supported venue in New York.
Chapter 11 creditors’ committees and debtors continue to challenge lenders’ prepayment premiums, commitment fees and post-bankruptcy interest claims in reorganization cases. Nevertheless, courts regularly reject these challenges in well-reasoned decisions.
One of the benefits to a corporate form of entity is the protection of shareholders from liability for obligations of the corporation. Of course, as we all know, there are still legal claims which could impose liability on a corporate shareholder for obligations of the corporation. In a recent case, a former executive of a corporation tried to assert a tortious interference claim against a majority shareholder, when it terminated severance payments that were owed to the executive. (Nation v. American Capital, Ltd., 7th Circuit Court of Appeals, Case No.
On May 18, 2012, the Arizona Supreme Court issued an opinion in Hogan v. Washington Mutual Bank, N.A., et al., CV-11-0115-PR, holding that Arizona’s non-judicial foreclosure statutes do not require the beneficiary to show the original promissory note for the trustee to notice and conclude a non-judicial trustee’s sale.
On June 22, 2012, Ritz Camera & Image, LLC, and various related entities (collectively, the "Debtors" or "Ritz II"), filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. Those familiar with Ritz Camera know that the company's predecessor, Ritz Camera Centers, Inc.
In February the Bankruptcy Court for the Central District of Illinois held in Crane v.
On July 9, 2012, the United States Court of Appeals for the Seventh Circuit issued a decision in Sunbeam Products, Inc. v. Chicago American Mfg., LLC (No. 11-3920), a case that addresses the effect of a bankruptcy trustee's rejection of trademark licenses. For years, the Bankruptcy Code's definition of "intellectual property" has excluded trademarks. But the Code provides very specific guidelines on the treatment of other intellectual property licenses in section 365(n), which was added by Congress in 1988 following the Fourth Circuit's decision in Lubrizol Enterprises, Inc.
On May 29, 2012, the U.S. Supreme Court in RadLAX Gateway Hotel v. Amalgamated Bank, its first significant Chapter 11 opinion in several years, affirmed the U.S. Court of Appeals for the Seventh Circuit’s decision in River Road Hotel Partners v. Amalgamated Bank, prohibiting a debtor from selling assets free and clear of liens under a plan of reorganization without permitting a secured creditor to credit bid. RadLAX resolves a circuit split and reverses prior rulings of the U.S.