On November 15, 2013, the United States Bankruptcy Court for the Southern District of New York (Glenn, J.) issued a lengthy decision1 in the Chapter 11 case of Residential Capital, LLC (“ResCap”). An important holding contained in this decision is that the bankruptcy claims of holders of notes issued with original issue discount (or OID) for tax and accounting purposes in a “fair value” exchange (an exchange for notes with a lower face amount) need not be reduced by any unaccreted OID.2
A Michigan bankruptcy judge ruled yesterday that Detroit is eligible for protection under Chapter 9 of the U.S. Bankruptcy Code, overruling numerous objections filed by labor unions, pension funds and other interested parties. Almost immediately following the ruling, a notice of appeal was filed by Counsel 25 of the American Federation of State, County & Municipal Employees (“AFSCME”).
In In re Eastman Kodak Co., 495 B.R. 618 (Bankr. S.D.N.Y. 2013) (No. 12-10202), the Bankruptcy Court for the Southern District of New York permitted a Chapter 11 debtor-in-possession (Kodak) to assign a previously assumed real estate lease despite the lease’s anti-assignment clause.
On October 7, 2013, the United States Supreme Court refused to review a Seventh Circuit decision1 in the Castleton Plaza, LP case, which held that a new value plan proposed by the debtor in which an equity-holder’s spouse would provide a cash infusion to the debtor in exchange for 100 percent of the reorganiz
Upon learning that its borrower has filed a case under chapter 11 of the Bankruptcy Code, a secured lender may decide not to participate in that case. The lender may want to ignore the bankruptcy case in order to avoid the expense of retaining bankruptcy counsel, or, relying on the general rule that liens pass through bankruptcy unaffected, may simply prefer to wait until the chapter 11 case ends and then enforce its lien. In a recent Fifth Circuit Court of Appeals decision, Acceptance Loan Company, Incorporated v.
In a recent advisory, we reported on an apparently favorable decision to secured creditors from the Fifth Circuit Court of Appeals that held that a secured creditor’s claim survives bankruptcy where the secured creditor received notice of the case and was found to have not actively participated in it.
This week, the U.S. House of Representatives passed the Asbestos Bankruptcy Trust Transparency Bill. The legislation would, if enacted into law, require bankruptcy trusts to file quarterly reports with bankruptcy courts disclosing the names, asbestos-related exposure history, and basis of the victim’s claims for each claimant. These reports would be made available on the courts’ public dockets. Confidential medical records or social security information would not be disclosed.
In an adversary proceeding filed in the American Home Mortgage Holdings, Inc. bankruptcy case, the Delaware bankruptcy court affirmed that triangular setoffs are not allowed under the Bankruptcy Code and cannot be modified by contract or under the Bankruptcy Code’s safe harbor provision. In re American Home Mortgage Holdings, Inc., et al., Adv. Proc. No. 11-51851 (Bankr. D. Del. Nov. 8, 2013). Two contracts were at issue – a swap agreement between a bank and American Home Mortgage Investment Corp.
The Bankruptcy Court for the Southern District of New York overseeing the Residential Capital (“ResCap”) cases issued an opinion on November 15, 2013 (the “Opinion”)2 allowing the unamortized interest associated with original issue discount (“OID”) that was generated in a fair market value exchange and claimed by ResCap’s junior secured noteholders (the “Holders”). While the OID ruling is only one component of the Opinion,3 it may have far reaching implications, as already evidenced in the pricing of other OID notes that were the product of fair market value exchanges.