Introduction
In a widely followed dispute, the Fifth Circuit Court of Appeals will soon render a decision on the appeal of a Texas Bankruptcy Court’s refusal to recognize non-debtor third party releases in the Mexican reorganization proceeding (concurso mercantil) of Mexican glass manufacturer Vitro SAB de CV. Wall Street and the capital markets will be watching this appeal closely as a reversal of the Bankruptcy Court would likely make lenders and bondholders extremely nervous about extending future credit to Mexican corporations.
The United States Court of Appeals for the Eleventh Circuit (the “Eleventh Circuit”) has reinstated the controversial 2009 decision of the United States Bankruptcy Court for the Southern District of Florida (the “Bankruptcy Court”) that required a group of lenders to disgorge $421 million as fraudulent conveyances under sections 548 and 550 of the Bankruptcy Code.
On July 10, 2012, the United States Bankruptcy Court for the Western District of Kentucky ruled that the Council on Occupational Education, Inc., the accreditor for Decker College, Inc., made factually erroneous statements to DOE. In re Decker College, Inc., Case No. 05-61805 (W.D. Ky. July 10, 2012), Dkt. 198 at 18. Specifically, the Court found that the accreditor had falsely informed DOE that Decker College had not been accredited to offer distance education programs.
A decision issued earlier this year by a Florida bankruptcy court1 provides comfort to those who accept payment from a debtor-in-possession in return for goods or services. The court held that to invoke the jurisdiction of a bankruptcy court in a lawsuit to recover an alleged impermissible post-petition transfer by a debtor, the plaintiff must establish that the debtor's estate was diminished as a result of the transfer to the defendant.
In a surprising decision certain to reinvigorate the ongoing debate about the scope of Stern v. Marshall, ___ U.S. ___, 131 S. Ct. 2594 (2011), the Sixth Circuit Court of Appeals adopted a broad view of Stern and held that the structural nature of the limitations imposed on bankruptcy courts by Article III of the Constitution could not be waived by a party’s failure to object at the trial court level. The decision, Waldman v. Stone, 2012 WL 5275241 (6th Cir. Oct.
On October 16, 2012, the United States Tenth Circuit Court of Appeals overturned decisions of the United States Bankruptcy Court for the District of Colorado and the United States District Court for the District of Colorado that had cast doubt as to whether a lender could enforce a security interest in the proceeds from the sale of a borrower’s FCC broadcast license. The case, Valley Bank and Trust Company v. Spectrum Scan, LLC (In re Tracy Broadcasting Corp.), 2012 U.S. App. LEXIS 21505 (10th Cir. Colo. Oct.
Chapter 15 of the Bankruptcy Code provides a procedure to obtain recognition of a foreign bankruptcy, insolvency or debt adjustment proceeding (a “foreign proceeding”) in the United States. Chapter 15 draws a distinction between a “foreign main proceeding” (i.e., a foreign proceeding pending in a country where the debtor has the center of its main interests) and a “foreign nonmain proceeding” (i.e., a foreign proceeding pending where the debtor has “an establishment”).
The United States Bankruptcy Court for the District of Nebraska has held that an insurer may make settlement payments for claims against a debtor’s directors and officers where any claims of the debtor are subordinate to those of the directors and officers under the terms of the policy. The court stated that under these circumstances “the issue of whether the policies are property of the bankruptcy estate is irrelevant.” In re TierOne Corp., 2012 WL 4513554 (Bankr. D. Neb. Oct. 2, 2012).