Recent case law reminds practitioners and lenders to pay careful attention when drafting prepayment premium provisions in debt instruments or risk having the premiums disallowed in a borrower’s bankruptcy case.
A Western District of New York bankruptcy court has held that the safe harbor provisions of section 546(e) of the Bankruptcy Code apply to leveraged buy-outs of privately held securities. See Cyganowski v. Lapides (In re Batavia Nursing Home, LLC), No. 12-1145 (Bankr. W.D.N.Y. July 29, 2013).
Late Sunday night, U.S. Bankruptcy Judge Arthur Gonzalez approved the sale of most of Chrysler's assets to Italian Automaker Fiat S.p.A., as contemplated in the Master Transaction Agreement between the two companies.
A federal district court has ruled that a distressed debt fund is not a “financial institution” for purposes of the assignment provisions of a loan agreement.
Background
On June 25, 2013, the Bankruptcy Court for the Southern District of New York (the “Court”) issued a memorandum decision in the Lehman Brothers SIPA proceeding1 holding that claims asserted by certain repurchase agreement (“repo”) counterparties (the “Representative Claimants”) did not qualify for treatment as customer claims under SIPA.
A & F Enterprises, Inc. v. IHOP Franchising LLC (In re A & F Enterprises, Inc.), 2014 WL 494857 (7th Cir. 2014)
The Ninth Circuit has joined the majority of Circuit Courts in holding that bankruptcy courts have the authority to recharacterize alleged debts as equity. See Official Comm. of Unsecured Creds. v. Hancock Park Capital II, L.P. (In re Fitness Holdings Int’l, Inc.), No. 11-56677, --- F.3d ----, 2013 WL 1800000 (9th Cir. April 30, 2013). In doing so, the appellate court has explicitly reversed the contrary precedent of In re Pacific Express, Inc., 69 B.R. 112, 115 (B.A.P. 9th Cir. 1986).
This morning, General Motors Corp. (GM) announced in a Form 8-K filing that the U.S. Treasury Department has proposed details of a reorganization plan to GM in the event that GM seeks bankruptcy protection and bankruptcy court approval for the sale of substantially all of its assets to a newly organized company (New GM) pursuant to Section 363 of the Bankruptcy Code (363 Sale). Following the proposed 363 Sale, the U.S.
On February 4, 2014, the United States Bankruptcy Court for the District of New Jersey in In re Surma, 2014 WL 413572 (Bankr. D.N.J. Feb. 4, 2014), held that rents were not property of the debtor’s bankruptcy estate because they were subject to an absolute and unconditional assignment of rents in favor of the secured lender. As a result, the court concluded that the debtor may not, through his Chapter 11 plan of reorganization, use or allocate rents.
Background