In September 2011, in In re Longview Aluminum, LLC, 10-2780 (7th Cir. 2011), the Seventh Circuit Court of Appeals held that members of an LLC are insiders for preferential transfer purposes under the Bankruptcy Code. This is the case even if the member holds only a minority membership interest and is not actually in control of the enterprise.

Highly anticipated changes to Rule 2019 of the Federal Rules of Bankruptcy Procedure became effective on December 1, 2011. Rule 2019 mandates certain disclosures concerning the economic interests of creditors and interest holders in bankruptcy cases. Whether these disclosure requirements apply to ad hoc, or informal, creditor groups has been the subject of vigorous dispute in the bankruptcy courts during the last four years, with courts lining up on both sides of the divide in roughly equal numbers.

On April 26, 2011, the Supreme Court of the United States adopted amendments to Rule 2019 of the Federal Rules of Bankruptcy Procedure (Amended Rule 2019) and submitted the proposed amendment to Congress for approval. Amended Rule 2019 was approved by Congress and became effective on December 1, 2011. The rule governs certain disclosure requirements for groups consisting of multiple creditors or equity security holders acting in concert in Chapter 9 or Chapter 11 cases.

In the first circuit-level opinion on the issue, the Fourth Circuit Court of Appeals in Matson v. Alarcon, 651 F.3d 404 (4th Cir. 2011), held that, for purposes of establishing priority under section 507(a)(4) of the Bankruptcy Code, an employee's severance pay was "earned" entirely upon termination of employment, even though the severance amount was determined by the employee's length of service with the employer.

Section 507(a)(4)

In its recent decision ACE Capital Ltd. v. Morgan Waldon Ins. Mgmt., LLC, 2011 U.S. Dist. LEXIS 135902 (W.D. Pa. Nov. 28, 2011), the United States District Court for the Western District of Pennsylvania had occasion to consider the scope of an insolvency exclusion in a professional liability policy.

The U.S. District Court for the Southern District of New York recently issued a decision that will significantly limit the chances of success for many claims that the trustee of the Bernard L. Madoff Investment Securities (“BLMIS”) estate, Irving Picard, has brought against former investors in BLMIS to recover funds for the estate. In Picard v. Katz, 11 Civ. 3605 (S.D.N.Y.), District Judge Jed S. Rakoff issued a decision that dismissed most of the causes of action brought against a group of investors under the U.S.

The bankruptcy of a licensor can dramatically impact the rights of an intellectual property licensee.

The fundamentals of corporate action can seem about as interesting as flossing.  Yet, the failure to attend to either is likely to result in unpleasant consequences as one lawyer recently discovered in Winterton v. Humitech of No. Cal., LLC, 2011 Bankr. LEXIS 4164 (9th Cir. BAP 2011).

The Sixth Circuit is one of only five federal appellate courts to institute a bankruptcy appellate panel under 28 U.S.C. § 158(b).  (The others are the First, Eighth, Ninth, and Tenth circuits.) As the bankruptcy appellate panel is unfamiliar to many non-bankruptcy attorneys, this post will review the Sixth Circuit’s bankruptcy appellate panel. 

On November 22, 2011, the Court of Appeals for the Eleventh Circuit issued a per curiam opinion that piqued the interest of bankruptcy practitioners nationwide and sent secured creditors scrambling to ensure that their rights to a deficiency claim had been properly preserved in pending bankruptcy cases. The Eleventh Circuit held that the IRS had waived its right to an unsecured deficiency by filing a proof of claim that evidenced a secured claim but failed to note that a portion of the claim may be unsecured.