The Supreme Court held 8-0 that section 1129(b)(2) of the bankruptcy code requires that if a debtor proposes to sell property under a plan of reorganization it must permit secured lenders to submit credit bids in the sale process.  The outcome is consistent with our views of the rights of secured lenders under appropriate bankruptcy practice – however, the Supreme Court’s analysis eschews policy concerns and focuses almost exclusively on the plain language of the statute and applicable canons of statutory construction.

On May 4, 2012, Judge J. Paul Oetken of the United States District Court of the Southern District of New York held that the Bankruptcy Court has the injunctive power to enforce the automatic stay against entities falling within the Bankruptcy Court’s in personam jurisdiction, and that, in this case, the enforcement of the automatic stay did not violate interests of comity.  Sec. Investor Prot. Corp v. Bernard L. Madoff Inv. Sec., LLC (In re Bernard L. Madoff Inv. Sec., LLC), No. 11 Civ. 8629 (JPO), 2012 WL 1570859 (S.D.N.Y. May 4, 2012).  

On May 29, 2012, the United States Supreme Court upheld a secured creditor’s absolute right to credit bid when a debtor files a Chapter 11 plan proposing to sell the secured creditor’s collateral free and clear of the secured creditor’s liens. RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. ___ (2012). In just a little over one month since oral argument, the Supreme Court resolved a conflict between two circuit courts of appeal as to whether a plan could prohibit a secured creditor from credit bidding on its collateral at a sale.

The United States Court of Appeals for the Eleventh Circuit issued its much anticipated decision in the TOUSA, Inc. bankruptcy cases on May 15, 2012.  The decision provides an ominous reminder to Lenders to carefully assess the value of accepting asset pledges or guarantees from borrowers’ subsidiaries, sometimes referred to as upstream guarantees.

The rules applying to the filing of proofs of claim were overhauled substantially in 2011 and require parties filing proofs of claim in bankruptcy proceedings to take heed, especially where the debtor is a natural person (an individual). 

On May 24, 2012, the California Public Utilities Commission (CPUC) dismissed with prejudice a complaint brought by AT&T California, Inc. against Fones4All Corp. in 2006. AT&T sought to recover alleged overcharges paid to Fones4All for termination of intraLATA toll traffic. Following an evidentiary hearing, the CPUC issued D.07-07-013, granting the relief AT&T requested in its complaint, or approximately $2.6 million, plus interest.

Buying natural gas assets from financially distressed companies is an inherently risky proposition.  Even when an attractive prospect is identified, the purchaser has to overcome a number of issues such as clearing up title, including mechanic and materialman liens and getting assignments of contracts and lessor consents.  Assuming these hurdles can be managed, the purchaser is also faced with legacy liability problems ranging from plugging and abandonment and decommissioning costs, unknown claims from interest owners under joint operating agreements, general claims from oil field

Today, the Supreme Court of the United States issued its much awaited decision in RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. ______ (2012). The noteworthy decision resolves any uncertainty surrounding a secured creditor’s right to credit bid in a sale under a chapter 11 plan which arose after cases like Philadelphia Newspapers 599 F.3d 298 (3d Cir. 2010) curtailed the right.

In a unanimous decision, the U.S. Supreme Court held that debtors may not obtain confirmation of a Chapter 11 cramdown plan that provides for the sale of collateral free and clear of a creditor’s lien but does not permit the creditor to credit-bid at the sale. InRadlax Gateway Hotel, LLC et al. v.

In re Vitro, S.A.B de C.V v. ACP Master, Ltd., et al., Case No. 11-33335-HDH-15 (N.D. Tex. 2011), is a decision by a bankruptcy court but contains discussion of the issue often arising in contentious international litigation:  attempts to enjoin proceedings in other countries in favor of proceedings in the U.S., or attempts to enjoin proceedings in the U.S.