A New York bankruptcy court has ruled that certain victims of Bernard Madoff’s highly publicized Ponzi scheme are not entitled to adjust their claims to account for inflation or interest. Securities Investor Protection Corporation v. Bernard L. Madoff Investment Securities LLC, 496 B.R. 744 (Bankr. S.D.N.Y. 2013). The Madoff Liquidation Trustee brought the motion asking the court to determine that Madoff customers’ “net equity” claims did not include “time-based damages” such as interest and inflation under the Securities Investor Protection Act (“SIPA”).
On January 17, 2014 the Bankruptcy Court for the District of Delaware issued a ruling in Fisker Automotive Holdings, Inc., et. al., Case No. 13-13087 (KG), which highlights potential risks to both secured creditors and purchasers of claims in bankruptcy section 363 sales. The facts in Fisker are straightforward. Fisker was founded in 2007 to make high-end electric cars and was financed principally with federal and state government loans secured by some, but not all, of Fisker’s assets.
Does a lender have a duty to act in good faith when negotiating with a borrower during a commercial loan modification? In an order issued recently by the United States Bankruptcy Court for the Eastern District of North Carolina, in In re: Burcam Capital II, LLC, the court denied a lender’s motion to dismiss a borrower’s claims against the lender. The Borrower alleged that the lender’s failure to modify the terms of the loan constituted a breach of the lender’s obligation to deal with the borrower in good faith, as well as an unfair or deceptive trade practice.&nbs
In In re Cook, 2014 Bankr. LEXIS 67 (B.A.P. 8th Cir. Jan.
A bankruptcy judge in the Southern District of New York recently held that section 546(e) of the Bankruptcy Code does not prevent a debtor’s creditors from bringing state-law fraudulent conveyance actions that challenge a leveraged buyout of the debtor. Weisfelner v. Fund 1 (In re Lyondell Chem. Co.), No. 10-4609 (REG), --- B.R. ----, 2014 WL 118036 (Bankr. S.D.N.Y. Jan. 14, 2014).
The biggest trend in Chapter 11 bankruptcies over the past 10 years is to sell assets through a “Section 363 sale,” named for Section 363 of the Bankruptcy Code, which describes the standards for sales in bankruptcy court. Previously, in most Chapter 11 cases, the debtor would propose a Chapter 11 plan. In successful cases, the Chapter 11 plan would be approved by creditors and by the court. If a debtor was selling substantially all of its assets, the sale would be part of the Chapter 11 plan.
In a departure from other bankruptcy courts in the Third Circuit and her own recent prior opinion, U.S. Bankruptcy Chief Judge Mary France of the Middle District of Pennsylvania broadly interpreted the U.S. Supreme Court’s ruling in Stern v. Marshall, 564 U.S. 2 (2011), and held that a bankruptcy court lacks the constitutional authority to issue a final judgment in any fraudulent transfer action where the defendant (i) has not filed a proof of claim and (ii) has not consented to the bankruptcy judge entering a final judgment on the matter.
On January 10, 2014, a Bankruptcy Court Judge issued a strongly-worded, 65-page opinion that exposes a “startling pattern of misrepresentation” by some plaintiffs’ attorneys in asbestos litigation. He concluded that the “withholding of exposure evidence by plaintiffs and their lawyers was significant and had the effect of unfairly inflating” recoveries. In re GarlockSealing Techs., No. 10-31607, at 35, 37 (Jan. 10, 2014, Bankr. W.D.N.C.).
On January 10, 2014, in a closely watched case, Judge George Hodges of the Bankruptcy Court for the Western District of North Carolina ruled that Garlock Sealing Technologies, Inc.