Yesterday Governor Scott Walker signed into law SB 241 which permits non-judicial foreclosures for mortgages and assessment liens on timeshare estates and licenses. The new law took effect upon being signed by Governor Scott Walker.
New amendments to the Bankruptcy Rules became effective on December 1, 2011. These amendments add new requirements and potentially harsh penalties for failure to comply. An overview of those amendments follows.
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On December 7, the FCC adopted a consent decree with an international carrier resolving several alleged transfers of FCC authorizations without prior approval. This marks the latest in a series of enforcement actions in the area of ownership violations. Many of these involve carriers providing foreign terminations. The consent decree underscores the importance for all regulated carriers to monitor changes in ownership, even pro forma changes, and to seek prior FCC approval for the changes.
From time immemorial, banks and other secured lenders have relied on their ability to "credit bid" for their collateral as a key source of protection and negotiating leverage against debtors and competing bankruptcy acquirors. Credit bidding secured debt rather than paying cash for collateral has been an effective counterweight against a debtor’s protections of the automatic stay and its exclusive right to control the plan formulation process and bankruptcy sales under Section 363 of the Bankruptcy Code.
The U.S. Supreme Court will rule this term in RadLAX Gateway Hotel Inc. v. Amalgamated Bank on whether the Bankruptcy Code permits a debtor in a chapter 11 case to sell encumbered assets without providing the secured lender an opportunity to credit bid its debt. Determination of this question will require the Court essentially to choose between two opposing approaches to statutory interpretation, and decide whether the so-called “plain meaning” of a highly formalistic reading of the Bankruptcy Code should trump decades of established commercial practice.
Section 1129(b)(2)(A)(iii) of the Bankruptcy Code allows a court to find that a chapter 11 “cramdown” plan is “fair and equitable” to an objecting class of secured creditors if the plan provides for the realization by such holders of the “indubitable equivalent” of their claims. Section 1129(b)(2)(A)(ii), through reference to Section 363(k), permits the sale of collateral free and clear of liens if secured creditors are allowed to “credit bid”—that is, to bid the value of their claim in an auction of the collateral.
A federal district court, applying Pennsylvania law, has held that the insolvency exclusion in an insurance agency’s professional liability policy excused the insurer from the duty to defend the agency in lawsuits alleging that it had caused employee benefit plans that it created to be underfunded. ACE Capital Limited v. Morgan Waldon Ins. Management, LLC, Civil Action No. 11-128, 2011 WL 5914275 (W.D. Pa. Nov. 28, 2011).
An English appellate court permitted an Australian reinsurer in liquidation to enforce a judgment entered in Australian insolvency proceedings against a Lloyd’s syndicate, which had elected not to participate in the foreign proceedings. On appeal, the syndicate argued that England’s reciprocity act did not apply to foreign judgments made in insolvency proceedings, and that England’s insolvency act, which recognizes Australian courts, should be interpreted as strictly permitting only Australian choice of law, rather than the enforcement of Australian judgments.
In today’s lending climate, confession of judgment provisions (“COJ Provisions”) have become a fact of life for the Virginia banker. Indeed, as troubled loans become more prevalent, a properly drafted COJ Provision can often be a creditor’s best friend. No longer can we afford to lump COJ Provisions into that fuzzy “boilerplate” category that we so easily gloss over. More and more bankers are coming to the realization that a COJ Provision is one of the most powerful tools a creditor can have against a defaulting debtor.
The U.S. Court of Appeals for the Second Circuit, on Dec. 2, 2011, ruled in favor of SRZ client Alfa, S.A.B. de C.V., denying Enron’s petition for rehearing in Enron Creditors Recovery Corp. v. Alfa, S.A.B. de C.V., 651 F.3d 329 (2d Cir. 2011). The court had previously ruled against Enron more than five months ago, holding that its redemptions of commercial paper were “settlement payments” and thus not voidable as preferential or fraudulent transfers under Bankruptcy Code § 546(e), one of the code’s so-called “safe harbor” provisions.