On January 17, 2013, in a lengthy and closely reasoned opinion,1 Judge Sean Lane of the Bankruptcy Court for the Southern District of New York authorized American Airlines, Inc. (“American”) to repay $1.3 billion in debt without payment of a make-whole premium over the objection of U.S.
Introduction
The United States Bankruptcy Court for the District of Montana in connection with In re Southern Montana Electric Generation and Transmission Cooperative, Inc. held that electricity was a “good” for purposes of section 503(b)(9) of the Bankruptcy Code. That means that anyone sells electricity to a person who later goes bankrupt is entitled to a high-priority administrative expense claim for the value of the electricity delivered in the 20 days prior to the bankruptcy.
The United States Bankruptcy Court for the Eastern District of New York held that it had subject matter jurisdiction over a bankruptcy trustee’s adversary proceeding against the bankrupt entity’s insurer because the policy and policy proceeds were part of the policyholder’s bankruptcy estate. EMS Financial Services, LLC. v. Federal Ins. Co., 2013 WL 64755 (Bankr. E.D.N.Y. Jan. 4, 2013).
Introduction
The bankruptcy trustee of a property management company sought to recover money paid to a power company prior to bankruptcy as an avoidable preference. The Fifth Circuit agreed with both the bankruptcy court and the district court that the payments were settlement payments under a forward contract exempt from avoidance.
March 9, 2012: Publication of Dynegy Examiner’s Report
Lest you thought you had heard the end of the Stern v. Marshall debate, two recent circuit court decisions remind us that Stern is alive and influential. In October, the Sixth Circuit weighed in on a bankruptcy court’s constitutional authority where it discharged certain fraudulent debts and awarded damages. In early December, the Ninth Circuit performed a similar constitutional analysis where the bankruptcy court decided a fraudulent transfer action against a noncreditor of the bankruptcy estate.
Since theIn re Crane decision was handed down by the Bankruptcy Court for the Central District of Illinois in April 2012, all eyes in the mortgage banking industry have been focused on the appeal of the decision pending in the U.S. District Court, in the hopes that the widely criticized ruling of the Bankruptcy Court would be overruled.
The Fifth Circuit recently upheld a Texas Bankruptcy Court’s refusal to enforce non-debtor third party releases in the Mexican reorganization proceeding (known as a concursomercantil) of Mexican glass manufacturer Vitro SAB de CV. As a result of this decision, Wall Street and the capital markets will breathe a sigh of relief and will likely continue to extend credit to Mexican corporations with some confidence that guaranties will be enforced.