The United States District Court for the District of Delaware, on July 21, 2014, held that an indenture trustee’s late filing of senior claims did not waive the lenders’ contractual subordination rights, reversing the bankruptcy court. In re Franklin Bank Corporation, 2014 U.S. Dist. LEXIS 98327 (D. Del. July 21, 2014). Nor did the senior trustee’s late filing show inequitable conduct warranting equitable subordination of the tardily filed senior claims to timely filed junior claims.
House bill H.R. 2533 was introduced three years ago with much fanfare by the then Chairman of the House Judiciary Committee. H.R. 2533 proposes amending “title 28 of the United States Code with respect to proper venue for cases filed by corporations under chapter 11 of title 11 of such Code.” It is intended to reduce the number of jurisdictions available for filing a bankruptcy case by effectively eliminating a debtor’s “place of incorporation” as a venue option.
Steve McCroskey: Jacobs, I want to know absolutely everything that’s happened up ‘til now.
Jacobs: Well, let’s see. First the earth cooled. And then the dinosaurs came, but they got too big and fat, so they all died and they turned into oil. . . .
-Airplane II: the Sequel
In Crawford v. LVNV Funding, LLC, No. 13-12389 (July 10, 2014), the Eleventh Circuit held that the Fair Debt Collection Practices Act (FDCPA) prohibits filing a proof of claim on a time-barred debt in bankruptcy court, where the party attempting to collect knows the debt is time barred. The appellate court observed that a “deluge has swept through U.S. bankruptcy courts” of consumer debt buyers attempting to collect expired debts from debtors in Chapter 13 bankruptcy.
Lenders should be aware of a recent Bankruptcy Court decision that barred a lender from obtaining certain costs when it did not comply with a notice requirement in a mortgage.
On June 5, 2014 the United States Bankruptcy Court in In re Demers, BR 13-11539, 2014 WL 2620961 (Bankr. D.R.I. June 5, 2014) ruled that it is inequitable to shift the costs of a creditor’s error in proceeding with the foreclosure process to the debtor when the creditor sent an unspecific and unclear notice and consequently was not entitled to proceed.
As we noted last month, the U.S. Supreme Court’s unanimous decision in Executive Benefits Insurance Agency v. Arkison, Case No. 12-1200, 573 U.S. ___ (2014), affirmed the constitutional authority of bankruptcy courts to issue proposed findings of fact and conclusions of law to federal district courts in connection with “Stern claims”.
One topic we regularly write about on the Bankruptcy Blog is releases – especially third-party releases. In fact, as recently as Thursday, we wrote about third-party releases. The topic of third-party releases is often controversial, and circuits disagree about the extent to which they are permissible, if at all.
Discounted cash flow analysis is a mainstay among the valuation methodologies used by restructuring professionals and bankruptcy courts to determine the enterprise value of a distressed business. Despite its prevalence, the United States Bankruptcy Court for the Southern District of New York recently concluded the DCF method was inappropriate for the valuation of “dry bulk” shipping companies.