In the ongoing RadioShack (RS) bankruptcy case, a Delaware bankruptcy court took a first look at the enforceability of Agreements Among Lenders (AALs), the contracts governing the often-times complicated relationships among lenders with different risk and yield appetites yet which reside in one credit agreement. While the RS bankruptcy court provided long-awaited guidance on some aspects of AALs in its recent oral ruling, much has been left to the continued imaginations of those who dream of buy-out rights, waivers of voting rights and the other power-shifting mechanisms in AALs.
Introduction
In Ogle v. Fidelity & Deposit Co. of Maryland, 586 F.3d 143 (2d Cir. 2009), the Second Circuit has now become the second circuit court of appeals to recently conclude that general unsecured creditors may include postpetition attorneys’ fees as part of their claim when attorneys’ fees are permitted by contract or applicable state law.11
In a case that could have upended the bankruptcy and magistrate court systems, the Supreme Court took a pragmatic approach yesterday when it held in Wellness Int’l Network, Ltd. v. Sharif that with “knowing and voluntary consent” of the parties, a bankruptcy court could adjudicate a so-called “Sternclaim,” which would otherwise be outside the scope of its constitutional power. The Court’s 2011 ruling in Stern v.
In Auday v. Wet Sale Retail, Inc., the Sixth Circuit considered an action by a former individual debtor who sued for an age discrimination claim. The district court barred the plaintiff from litigating the claim because she failed to identify it as an asset in the bankruptcy court, and the claim had arisen by that point in time.
The Second Circuit Court of Appeals recently issued its decision on a question of first impression before the court: whether section 502(d) of the Bankruptcy Code applies to administrative claims arising under section 503(b) of the Bankruptcy Code. See, generally, ASM Capital, L.P. v. Ames Dept. Stores, Inc. (In re Ames Dept. Stores, Inc.), 582 F.3d 422 (2d Cir. 2009).
San Bernardino’s Chapter 9 case is back in the news. On May 18, the City Council approved the City’s proposed exit plan for filing with the Bankruptcy Court in a 6 to 1 vote. San Bernardino’s plan is challenging to say the least and certainly consistent with Judge Jury’s January comment that “sometimes you have to get ugly to get pretty.” The plan reflects the City’s “Gordian Knot” of financial obligations to bondholders, employees and retirees, and the City’s need to deliver essential services to residents without raising taxes beyond the breaking point.
In a recently published opinion, Judge John K. Olson of the United States Bankruptcy Court for the Southern District of Florida permitted the bankruptcy estates of TOUSA, Inc. and its debtor subsidiaries to avoid and recover more than $1 billion of liens and cash that the debtors had transferred to secured lenders in a transaction entered into six months prior to the debtors’ chapter 11 bankruptcy filing. Official Committee of Unsecured Creditors of TOUSA, Inc. v. Citicorp North America, Inc., 2009 Bankr. LEXIS 3311 (Bankr. S.D. Fla. Oct. 13, 2009).
Recently the Eleventh Circuit agreed to hear Jefferson County’s (“JeffCo”) petition for appeal of U.S. District Court Judge Sharon Blackburn’s ruling refusing to dismiss one of three appeals filed by JeffCo’s sewer system ratepayers.