-
Categories
Tags
-
Recent Posts
- Court Finds Investment Advisor’s Payments to Customers Are Not Exempt From Avoidance Under Section 546(e) of the Bankruptcy Code
- Vitro Update: “Savings Clause” Fails to Save Vitro Subsidiaries From Involuntary Bankruptcy
- SDNY Denies Payment of Administrative Expense Claim by Relying on the Operative Document as a Whole and Rejecting a Statutory Rule of Construction
- Gaming Alert – New Jersey Governor Chris Christie Conditionally Supports Online Gambling – Boyd Gaming and Caesars Stocks Rally as a Result
- In re Hostess Brands, Inc.: Southern District of New York Bankruptcy Court Refuses to Send Cash Collateral Dispute to Arbitration
Archives
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
Author Archives: John J Rapisardi
Fifth Circuit Crafts New Test For Foreign Debtor Relief
On Nov. 28, 2012, the U.S. Court of Appeals for the Fifth Circuit in In re Vitro S.A.B. de C.V. issued a groundbreaking decision under Chapter 15 of the Bankruptcy Code, which provides the mechanics for U.S. bankruptcy courts to deal with cross-border insolvency proceedings. Although deference to judgments of foreign courts is the norm under Chapter 15, in this instance the Fifth Circuit refused to enforce a court-approved Mexican plan of reorganization on the ground that it contained non-consensual non-debtor releases of noteholders’ claims against the debtor’s non-debtor subsidiaries. Unlike the bankruptcy court below, the Fifth
Circuit did not hold that non-consensual nondebtor releases are “manifestly contrary” to U.S. public policy. Instead, the court held that such releases could theoretically be approved in Chapter 15 cases, but only upon a showing of the same type of “exceptional circumstances” that are deemed to justify such releases in U.S. based cases under Chapter 11.
The Fifth Circuit also developed an impressive new analytical framework for interpreting and reconciling the various provisions of Chapter 15. If adopted by courts in other jurisdictions, the Fifth Circuit’s systematic approach to the application of Chapter 15 could prove even more influential than the specific holdings of the case.
Posted in Chapter 15
Supreme Court Affirms Secured Creditors’ Right to Credit Bid at Plan Sales
On May 29, 2012, the U.S. Supreme Court in RadLAX Gateway Hotel v. Amalgamated Bank, its first significant Chapter 11 opinion in several years, affirmed the U.S. Court of Appeals for the Seventh Circuit’s decision in River Road Hotel Partners v. Amalgamated Bank, prohibiting a debtor from selling assets free and clear of liens under a plan of reorganization without permitting a secured creditor to credit bid. RadLAX resolves a circuit split and reverses prior rulings of the U.S. Court of Appeals for the Third and Fifth circuits endorsing proposed plan sales that did not provide secured creditors with the right to credit bid. Continue reading
Posted in RADLAX
Extent of Non-Debtor Parent Exposure Under Channeling Injunctions
On April 10, 2012, the U.S. Court of Appeals for the Second Circuit in In re Quigley issued an opinion adopting a narrow interpretation of Section 524(g)(4) of the Bankruptcy Code,
which allows a bankruptcy court to enter an injunction that bars certain actions brought by plaintiffs against non-debtor third parties, such as a non-debtor parent company. Quigley reminds solvent corporate parent companies that there are limits to bankruptcy courts’ injunctive powers to insulate such parent companies from potential claims when their subsidiaries file for bankruptcy to restructure asbestos-related tort liabilities. Continue reading
Posted in Claims
RadLax Review – Oral Argument Observations
On Monday April 23, 2012, the U.S. Supreme Court heard oral arguments in RadLAX Gateway Hotel, LLC v. Amalgamated Bank. In this case, the Debtors proposed a plan of reorganization that prohibited their secured lenders from credit bidding on collateral to be sold pursuant to the plan under the indubitable equivalent prong of the cram down provisions of the Bankruptcy Code. Contrary to prior opinions of the Third and Fifth Circuits, the Seventh Circuit held that the plan was improper. Click here to view our previous posts on this case. The Court allotted thirty minutes of argument to RadLAX; and Amalgamated and the U.S. Government shared another thirty minutes of argument time. Restructuring Review attended the argument and, although it is generally difficult to predict how the Court will rule based on the questions directed to counsel during the argument, we note the following observations: Continue reading
Seventh Circuit Affirms Secured Creditors’ Cramdown Rights
On Jan. 19, 2012, the U.S. Court of Appeals for the Seventh Circuit in an opinion penned by Judge Richard Posner affirmed a bankruptcy court’s dismissal of In re River East Plaza, LLC, a single asset real estate case, rejecting the debtor’s attempt to substitute the lender’s original collateral for another form of security and pay out the secured claim over time pursuant to the
“cramdown” provisions of the Bankruptcy Code. The court’s analysis was strongly pro-secured lender and hinged particularly on the question of whether the secured creditor should be entitled to the appreciation of future value of its original prepetition collateral. Continue reading
Posted in Plans/Confirmation
Harrisburg: A Case Study in State Law Barriers to Chapter 9
On November 23, 2011, the Bankruptcy Court for the Middle District of Pennsylvania dismissed Harrisburg, Pennsylvania’s chapter 9 bankruptcy petition because Harrisburg was not specifically authorized to file for Chapter 9 as required by the Bankruptcy Code. Harrisburg’s failed attempt to remain in Chapter 9 highlights the political factors and state law constraints that municipalities must consider prior to seeking bankruptcy relief.[1] This article will discuss the origins of Harrisburg’s debt crisis, the Harrisburg City Council’s attempt to file for Chapter 9 without the Mayor’s approval, the legal obstacles placed in the path of the City Council’s bankruptcy filing, and the lessons that other distressed municipalities and creditors can learn from Harrisburg’s experience. Continue reading
Posted in Chapter 9
Tagged 10th Amendment, 14th Amendment, Act 26, Act 47, Chapter 9, Constitution, Harrisburg, municipal bankruptcy, Pennsylvania
The Unclear Status of Stakeholder Negotiations in a Post-WaMu World
Among the several issues addressed in the September 13th opinion of the United States Bankruptcy Court for the District of Delaware in In re Washington Mutual, Inc., the distressed investment and restructuring community has been focused on the holding that the participation of certain noteholders (the “Settlement Noteholders”) in plan-related settlement negotiations and subsequent trading activity gave rise to colorable claims that could be asserted against them. This ruling has cast uncertainty upon creditors’ ability to play a constructive role in achieving successful reorganization outcomes by way of consensual agreement. In light of the essential policy interest favoring settlements over protracted litigation, the framework set forth in WaMu may have the regrettable effect of chilling creditor participation in negotiations that would otherwise serve to benefit all stakeholders. Continue reading
Posted in Analysis, Claims, Plans/Confirmation
Tagged Wamu, Washington Mutual
In re Whittle Development: Just When You Thought Foreclosure Sales Were Sacrosanct …
On July 27, 2011, the U.S. Bankruptcy Court for the Northern District of Texas in Whittle Development, Inc. v. Branch Banking & Trust Co. (In re Whittle Development Inc.) issued an opinion finding that a debtor may avoid as a preferential transfer under Bankruptcy Code section 547 a prepetition real property foreclosure sale, even if the foreclosure sale complied with state requirements for a valid foreclosure. Whittle is significant not only because it throws into question the long-accepted notion that foreclosure sales are sacrosanct and their results final, but also because it represents a departure from Supreme Court precedent in the related area of fraudulent transfers under Bankruptcy Code section 548. Continue reading
Posted in Analysis
Tagged foreclosure
Seventh Circuit Reaffirms Secured Creditors’ Right to Credit Bid
In an opinion that has created the most significant bankruptcy-related circuit split in recent years, the U.S. Court of Appeals for the Seventh Circuit in In re River Road Hotel Partners, LLC1 vindicated secured lenders’ unqualified right to credit bid on asset sales under a chapter 11 plan. The Seventh Circuit in River Road rejected the rationale of the U.S. Court of Appeals for the Third Circuit in In re Philadelphia Newspapers, LLC. Continue reading
Posted in 363 Sales, Analysis
Tagged 363, credit bid, Seventh Circuit