In our update of October 20, 2008, we reported on whether "negative equity" can be part of a purchase money security interest. (http://www.masudafunai.com/showarticle.aspx?Show=3093) "Negative equity" is the excess of the amount owed on a trade-in item over the market value of the item.

It seems safe to assume that no lender would extend high-dollar credit without first having a deep knowledge of the party accepting the funds. Certainly, such deep knowledge would include the precise legal name of that borrower. Nevertheless, recent cases continue to demonstrate the prevalence of filing UCC-1 financing statements that may be deemed “seriously misleading” as to the name of the debtor and, therefore, ineffective to fix the secured creditor’s place in the chain of priority.

In a recent order entered in In re SemCrude, L.P., Case No. 08-11525, the Delaware bankruptcy court (1) clarified the application of Bankruptcy Code section 503(b)(9) to creditors’ priority claims arising from the delivery of goods in the 20 days before a bankruptcy filing and (2) amended a previously entered procedures order to allow for the resolution of disputed “Twenty Day Claims” on their merits.

Back in the mists of time, a seller that had a valid reclamation claim but was denied the return of its goods was entitled to an administrative expense claim (a claim with a higher priority than a general unsecured claim and thus a better chance of getting paid) or a lien on the debtor’s assets. The 2005 amendment to § 546(c) of the Bankruptcy Code changed all that by stripping away those alternative remedies.

Customers are the lifeblood of a retail company. Through purchases of merchandise, they provide necessary liquidity for the retailer’s operations and going-concern value. For many retailers, this liquidity often comes in the form of customer deposits for merchandise to be manufactured by the retailer and received by customers at a future date.

Whether a solar system is a “fixture” sounds like a mundane legal issue – but it has significant implications for the residential solar industry and for the financing of residential solar systems. If a system is regarded as a “fixture” of the house to which it is attached, then the enforceability and priority of the finance company’s lien on the system will be subject to applicable real estate law.

The Fifth Circuit recently issued an opinion that increases the marketability of estate assets often viewed as untouchable. In In re S. Coast Supply Co. ("South Coast"), 91 F.4th 376 (5th Cir. 2024), the Fifth Circuit held that a bankruptcy "preference" action may be sold to a third party under section 363 of the Bankruptcy Code even if the buyer is not an estate fiduciary and does not represent the bankruptcy estate. A preference action is an "avoidance" claim arising under section 547 of the Bankruptcy Code.

Interest rates remain high, and for many markets and asset classes, prices have yet to fall. However, there’s at least one way real estate investors can buy a property at the right price in this cycle: Distressed sales.

“It’s a main mechanism for price correction,” said Matthew Scoville, a New York-based attorney and partner at Hunton Andrews Kurth who has represented both lenders and real estate developers. In many cases, distressed sales allow investors to acquire properties that would otherwise not be available. “Opportunities are the name of the game,” he said.

As the cannabis industry matures, there will be winners and losers. Losers lack access to the U.S. Bankruptcy Code. Marijuana related assets cannot be sold free and clear of liens and encumbrances via the tried and true bankruptcy section 363 sale, which leaves the loser’s creditors without the best tool to maximize the value of the loser’s assets, and deprives acquirers of a federal court order conveying assets. What’s the state of play, and what’s the alternative for the losers, their creditors, and the companies that would acquire them?

STATE OF PLAY

In the wake of several high-profile collapses of cryptocurrency exchanges, most notably FTX, Celsius, and Voyager, the state of the digital asset landscape is ever-changing, with more questions and landmines than clear paths forward. Among the many issues that arise in these bankruptcy cases is the question of how to treat and classify digital assets, especially cryptocurrencies—e.g., who owns the cryptocurrencies deposited by customers.