The decision we've all been waiting for is in -- the U.S.
On June 6, 2012, the trustee liquidating Bernard L. Madoff Investment Securities Inc., Irving Picard, filed new lawsuits in the U.S. Bankruptcy Court in Manhattan against several European private banks. Included in the many new lawsuits he has filed are a complaint seeking $122.2 million against ABN Amro Fund Services Nominees Ltd.; a complaint seeking $108.1 million against Belgian private lender Banque Degroof SA; and two complaints filed against Swiss private banks EFG Bank SA and Lombard Odier Darier Hentsch & Cie, respectively seeking amounts of $354.9 million and $179.4 million.
The secured lender industry experienced a collective sigh of relief on May 29 after the Supreme Court ruled in RadLAX Gateway Hotel, LLC, et al. v. Amalgamated Bank that credit bidding remains a viable option to protect collateral in a cramdown bankruptcy plan. Expressly inscribed in Sections 363(k) and 1129(b)(2)(A) of the Bankruptcy Code, credit bidding has long been understood as a fairly uncontroversial right; until recently.
The Bottom Line:
Generally, retirement plan benefits are excluded from a bankruptcy estate. However, if the retirement plan is not covered by Title I of the Employee Retirement Income Security Act of 1974 (ERISA), a separate exemption from the bankruptcy estate must be found. Some retirement plans are not covered by Title I of ERISA because they do not cover employees, which, for this purpose, excludes the sole owner of a business and the owner’s spouse. These types of plans are commonly referred to as “Keogh” plans.
On March 15, 2012, the American Bar Association’s Electronic Discovery (ESI) in Bankruptcy Working Group (the “Working Group”) published an interim report addressing certain principles and suggested best practices for electronic discovery in bankruptcy cases (the “Interim Report”). The Working Group was formed to study and prepare guidelines or a “best practices” report on the scope and timing of a party’s obligation to preserve ESI in bankruptcy cases.
Baker Hostetler serves as court-appointed counsel to Irving H. Picard, SIPA Trustee for the liquidation of Bernard L. Madoff Securities LLC (“BLMIS”). In January of 2011, the SIPA Trustee obtained approval from the United States Bankruptcy Court for a $5 billion settlement for BLMIS customers with allowed claims. At the same time, the Bankruptcy Court also issued a permanent injunction with respect to claims that were duplicative or derivative of the SIPA Trustee’s claims. After an appeal, the District Court affirmed the settlement and the injunction in March of 2012.
The Delaware bankruptcy court in the KB Toys, Inc. cases recently held that a claims purchaser takes a claim subject to certain disabilities of the claim as held by the seller, regardless of whether the claim transfer is deemed a “sale” or an “assignment.” SeeIn re KB Toys, Inc., Case No. 04-10120 (KJC) (Bankr. Del. May 4, 2012). In so ruling, the Delaware court’s decision is somewhat at odds with the decision issued by the District Court for the Southern District of New York in the Enron bankruptcy cases. See Enron Corp. v.
After several years of unusually few corporate defaults, there has recently been an uptick in corporations failing to satisfy their bond and loan obligations. In a number of cases, the debts in question are part of multiple-lien or multi-tranche financing structures that incorporate complex subordination packages. The agreements at issue often go beyond merely subordinating rights to payments.
It is common for lenders to require borrowers to agree to pay a higher interest rate, known as the default rate, following an event of default under a loan. Some loan agreements also require the borrower to pay a fee in the event of a late payment. If the borrower files for bankruptcy protection, the Bankruptcy Code affords special protection to secured creditors with respect to collecting interest.