On May 5, 2009, Judge James Peck, the Bankruptcy Judge in the Lehman Brothers bankruptcy cases, held that the safe harbor provisions of the Bankruptcy Code do not override the mutuality requirements for setoff under section 553(a) of the Bankruptcy Code. As a consequence, the Bankruptcy Court prohibited Swedbank, a non-debtor counter party to a swap agreement, from setting off pre-petition claims against Lehman against funds collected for Lehman’s account postpetition. See In re Lehman Bros. Holdings Inc., Bankr. Case No. 08-13555 (JMP) (Bankr. S.D.N.Y.
Last week, the Supreme Court issued its decision in Travelers Indemnity Co. v. Bailey,2 establishing an important precedent concerning the ability of bankruptcy courts to release claims against third party non-debtors in chapter 11 plans of reorganization. In the June 2009 issue of Cadwalader’s Restructuring Review newsletter, we introduced this case and considered the potential implications of a ruling on this important but unsettled topic.
In recent opinions, the United States Courts of Appeals for the Fifth and Seventh Circuits have revisited the doctrine of equitable subordination and have underscored the requirement that, before a court can equitably subordinate a creditor’s claim, the court must find that other creditors have been harmed by the actions of the creditor. Importantly, both decisions stress that equitable subordination is meant to be remedial and not punitive, and may not be imposed merely because a creditor has engaged in misconduct.
On June 16th, the Supreme Court of the United States issued a decision that is likely to have a significant impact on how debtors will sell assets in bankruptcy. InFlorida Department of Revenue v.
Congress enacted amendments to the United States Bankruptcy Code in 2005 designed to increase certainty in the marketplace for mortgage loan repurchase agreements and other financial contracts.1 The contours – and limits – of these amendments were recently explored by the Delaware bankruptcy court in Calyon New York Branch v. American Home Mortgage Corp.
On August 26, 2014, Judge Robert D.
On September 25, 2012, Judge D. Michael Lynn for the United States Bankruptcy Court of the Northern District of Texas held that a “tail provision” for professional fees rendered prepetition survived – and was not cut off by – the debtor’s bankruptcy filing. In re Texas Rangers Baseball Partners, Case No. 10-43400-DML, 2012 WL 4464550 (Bankr. N.D. Tex. Sept. 25, 2012).
Background
The recent bankruptcy case of Hostess has centered on Hostess’s attempts to reject collective bargaining agreements with its unions. Hostess has emphasized that realigning labor costs is essential to its ability to successfully reorganize. Section 1113 of the Bankruptcy Code sets forth detailed requirements that a debtor must meet to modify or reject CBAs. Bankruptcy courts’ ultimate decision to authorize rejection of a CBA frequently turns on a detailed examination of the evidence presented in support of the rejection motion.
In the first part of this article, we considered the effect of section 365(d)(4) and other Bankruptcy Code sections on retailer debtors and their respective landlords, as well as on how retailer debtors can utilize the holiday sales season to implement a successful reorganization.
Despite the prevalence of first-lien/secondlien structures in the loan market over the course of the recently-ended leveraged transaction cycle, fully-litigated cases interpreting the provisions of first-lien/second-lien intercreditor agreements remain something of a rarity. As a result, cases providing guidance on the extent to which customary waivers included in such intercreditor agreements would be enforced are always welcomed by finance practitioners. It comes as no surprise then, that the decision of Judge Peck of the U.S.