With its landmark ruling in Deutsche Bank Trust Co. Ams. v. Large Private Beneficial Owners (In re Tribune Co. Fraudulent Conveyance Litig.), 818 F.3d 98 (2d Cir. 2016) ("Tribune 1"), the U.S. Court of Appeals for the Second Circuit held that claims asserted by creditors of the Tribune Co. ("Tribune") seeking to avoid payments to shareholders during a 2007 leveraged buyout ("LBO") as constructive fraudulent transfers were preempted by the "safe harbor" under section 546(e) of the Bankruptcy Code.

Two recent cases analyzed the misrepresentations of a debtor regarding a single asset and held a written misrepresented value of a single scheduled estate asset would result in nondischargeability under Section 727, and that a verbal misrepresentation of a pre-petition asset to a creditor did not result in an exception to discharge under Section 523.

The U.S. Court of Appeals for the Fourth Circuit recently held that certain deposits and wire transfers into a bankrupt debtor’s personal, unrestricted checking account in the ordinary course of business were not “transfers” under § 101(54) of the Bankruptcy Code, affirming the district court’s and bankruptcy court’s entry of summary judgment in favor of the bank in an adversary proceeding brought by the bankruptcy trustee.

A defendant bank (“Bank”) in a fraudulent transfer suit “could not prove” its “good faith” defense for loan repayments it received after its “investigator discovered [the] fraudulent past” of the Ponzi scheme debtor’s principal but “failed to disclose that past to [the Bank’s account] manager,” held the U.S. Court of Appeals for the Sixth Circuit on Feb. 8, 2017. Meoli v. Huntington Nat’l Bank, 2017 U.S. App. LEXIS 2248, *28 (6th Cir. Feb. 8, 2017).

LBOs can get messy. Such was the case for the Tribune Company, which, in conjunction with its private equity investor, borrowed approximately $10.7 billion in 2007 to finance its buyout. Soon after the LBO was completed, Tribune experienced financial difficulties that made it unable to service its new debt, and, in December 2008, the company filed for chapter 11 protection.

Another bankruptcy trustee catches another hapless college unaware. In Roach v. Skidmore College (In re Dunston), Bankr. S.D. Ga. (Jan 31, 2017), a trustee appears to win the next battle of “bankruptcy estates v. child’s college,” ruling that an insolvent parent who paid the college tuition of an adult child made a fraudulent transfer to the college.

The U.S. Supreme Court issued two rulings in 2016 involving issues of bankruptcy law.

Headlines 1. OCC to Consider Fintech Applications for Special Purpose National Bank Charters 2. Federal Banking Agencies Publish Guidance on New Credit Loss Accounting Standard 3. Federal Banking Agencies Issue Final Rule on Extended Exam Cycles 4. Division of Banks Amends Foreclosure Prevention and ATM/EFT Rules 5. Other Developments: Marijuana Guidance and Bank Fraud

1. OCC to Consider Fintech Applications for Special Purpose National Bank Charters

The U.S. Bankruptcy Code gives debtors access to powerful rights and remedies that are not available under non-bankruptcy law. As a balance to these extraordinary powers however, a debtor may lose some or all control over its own affairs under certain circumstances. One of the rights that the debtor “puts into play” when it files bankruptcy is the attorney-client privilege (the Privilege).

Copyrighting their names, “signing” with red thumbprints – we’ve seen some unusual court filings from unique individuals. But one person has apparently gone too far.

It can be incredibly frustrating for a lender when a borrower defaults on a loan and asserts frivolous defenses in response. A group of individuals who call themselves “sovereign citizens” or “sovereign freemen” often makes lawsuits quite tedious by refusing to recognize the authority of the courts or the government, or claiming that the loan is invalid because it is based on “vapor money.”