On May 4, 2016, the Court of Appeals for the Third Circuit held that a bankruptcy settlement in the form of a tender offer did not violate the principles of the bankruptcy process. See opinion here.
A recent case from the 11th Circuit illustrates the procedural perils of litigation arising from a bankruptcy case but ultimately tried in the district court. In Rosenberg v.
(6th Cir. B.A.P. May 11, 2016)
The Bankruptcy Appellate Panel reverses the bankruptcy court’s order allowing the unsecured creditor’s late-filed claim in this Chapter 13 case. The creditor filed its claim eight days after the bar date, and the bankruptcy court allowed the claim based on excusable neglect. The B.A.P. holds that a bankruptcy court does not have authority to extend the deadline in Rule 3002(c) through equitable powers or the doctrine of equitable tolling. Opinion below.
Judge: Humphrey
The United States Bankruptcy Court for the Southern District of Ohio, Eastern Division, (“the Court”) held in In re John Joseph Louis Johnson, III, Case No. 14-57104, 2016 WL 1719149, that a creditor violated the automatic stay by seeking to enforce an arbitration award against nondebtor co-defendants. The automatic stay applies not only to stay actions against the debtor personally but also prohibits “any act to … exercise control over property of the [debtor’s bankruptcy] estate.” 11 U.S.C.
The world is getting smaller. The number of people who hop from country to country throughout their lives is increasing. Inevitably, when a jet-setting life becomes financially troubled, bankruptcy and other court proceedings are likely to be similarly international. Two cases involving the same parties were heard in both the High Court in London and the US Bankruptcy Court for the Southern District of New York. See Kemsley v Barclays Bank Plc & Ors [2013] EWHC 1274 (Ch) (15 May 2013), 2013 WL 1904308, and In re Kemsley, 489 B.R. 346 (Bankr. S.D.N.Y. 2013).
For more than a century, courts in England and Wales have refused to recognize or enforce foreign court judgments or proceedings that discharge or compromise debts governed by English law. In accordance with a rule (the "Gibbs Rule") stated in an 1890 decision by the English Court of Appeal, creditors holding debt governed by English law may still sue to recover the full amount of their debts in England even if such debts have been discharged or modified in connection with a non-U.K.
Background
Avanti Communications Group PLC ("Avanti") are a satellite operator headquartered in London, with subsidiaries across Europe and Africa, providing fixed satellite services in Europe, the Middle East and Africa.
Avanti had issued Senior Secured Notes maturing in 2021 and 2023 and had borrowed under a senior term loan. Due to delays associated with two of Avanti's satellites, Avanti experienced financial difficulties, with a materially over-leveraged capital structure.
A divided panel of the Third Circuit Court of Appeals affirmed the district court's ruling in In re: Philadelphia Newspapers, et. al. (3d. Cir., Case No. 09-4266) and held that secured creditors do not have a statutory right to credit bid their debt at a sale conducted under a plan of reorganization pursuant to which the debtor elects to provide the secured creditors with the "indubitable equivalent" of their secured claim.
This week, in a 2-1 decision affirming the District Court’s reversal of a ruling of the Bankruptcy Court for the Eastern District of Pennsylvania, the United States Court of Appeals for the Third Circuit held that secured creditors do not have a right as a matter of law to credit bid their claim at an auction pursuant to a plan of reorganization where the debtor intends to impose the plan on its secured creditors through a “cramdown” under section 1129(b)(2)(A)(iii) of the Bankruptcy Code; i.e., a plan providing the secured creditors with the “indubitable equivalent” of their secured claim.
Credit bidding of debt held by a secured creditor at a sale of collateral under section 363 of the Bankruptcy Code has become commonplace.1 Does a secured creditor have that same ability in a sale under a chapter 11 plan? Most thought so, but according to the Third Circuit Court of Appeals, not always.