Author Archives: Kathryn M Borgeson

U.S. Second Circuit Requires Argentina to Pay Defaulted Sovereign Debt Under “Equal Treatment” Clause

Posted on November 29, 2012 by Gregory M. Petrick, Audrey Aden Doline, and Kathryn M. Borgeson

On 26 October 2012, the United States Court of Appeals for the Second Circuit upheld permanent injunctions designed to remedy Argentina’s breach of a promise to pay certain bondholders after a 2001 default on its sovereign debt. Relying on an “equal treatment” clause which provided that payment of the bonds ranked at least equally with Argentina’s other present and future bond issuances, the court held that Argentina could not discriminate against the defaulted bonds in favor of bonds issued in its 2005 and 2010 sovereign debt restructurings. Accordingly, the court enjoined Argentina from making payments on the 2005 and 2010 bonds without making comparable payments on the defaulted bonds. Continue reading →

Posted in Analysis

Patriot Coal Update: Mining For Venue

Posted on September 17, 2012 by Douglas Mintz and Kathryn M. Borgeson

Late last week, Judge Shelley C. Chapman of the Bankruptcy Court for the Southern District of New York heard arguments from a number of parties regarding whether the New York bankruptcy court is the proper venue for Patriot Coal Corporation’s bankruptcy cases. In re Patriot Coal Corp., Case No. 1:12-bk-12900. Judge Chapman did not rule on the venue question from the bench. Instead, the parties will wait for a ruling while proceeding with the bankruptcy case. Continue reading →

Posted in Analysis Tagged , , , , |

Extent of Non-Debtor Parent Exposure Under Channeling Injunctions

Posted on May 14, 2012 by John J. Rapisardi, Michael J. Cohen, and Kathryn M. Borgeson

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

SDNY Bankruptcy Court Interprets Section 546(e)’s Safe Harbors in Lehman-JPMorgan Dispute

Posted on May 3, 2012 by Mark C. Ellenberg, Douglas Mintz, and Kathryn M. Borgeson

On April 19, 2012, the U.S. Bankruptcy Court for the Southern District of New York granted in part and denied in part JPMorgan Chase, N.A.’s motion to dismiss an adversary complaint filed by Lehman Brothers Holdings Inc. (“LBHI”) and its Official Committee of Unsecured Creditors. The Complaint seeks to recover approximately $8.6 billion in prepetition transfers made by LBHI to JPMorgan in the days leading up to LBHI’s bankruptcy. JPMorgan filed a motion to dismiss the Complaint, arguing that it acted reasonably in requiring additional collateral at a time of great financial risk, and that the transfers that the Plaintiffs sought to unwind are immunized by the safe harbor protections of section 546(e) of the Bankruptcy Code. Continue reading →

Posted in Safe Harbors

Dante’s Third Ring: Lehman Investors Bring Adversary Proceeding In SDNY Bankruptcy Court

Posted on March 14, 2012 by Mark C. Ellenberg, Douglas Mintz, and Kathryn M. Borgeson

The battle over the enforceability of priority flip clauses in CDO indentures has entered a new phase. On February 8, 2012, a group of investors led by Belmont Park Investments Pty Ltd. filed an adversary proceeding against Lehman Brothers Special Financing Inc. and BNY Mellon Corporate Trustee Services Ltd. in the U.S. Bankruptcy Court for the Southern District of New York. The Investors seek recognition of a judgment entered by the High Court of Justice in England and Wales in Belmont Park Inv. Pty Ltd. & Others v. BNY Corp. Trustee Servs. Ltd., and a declaration that, as a matter of English law, the Investors have priority over LBSF, as swap provider, with respect to shared collateral securing notes issued under Lehman Brothers’ “Dante Programme.” The Investors filed a concurrent motion to withdraw the reference, seeking to remove the adversary proceeding from the U.S. Bankruptcy Court to the U.S. District Court. Continue reading →

Posted in Safe Harbors, Standing/Jurisdiction

Ninth Circuit Finds that Orders Denying Removal of a Trustee Are Not Subject to Appeal

Posted on February 16, 2012 by Kathryn M. Borgeson

On February 9, 2012, the Ninth Circuit held that an order denying a motion to remove a trustee was not a final appealable order under 28 U.S.C. § 158(d)(1) because it did not substantively affect the parties’ rights and permanently determine the trustee’s status, rather it merely maintained the status quo. SS Farms, LLC v. Sharp (In re SK Foods, L.P.), — F.3d —-, 2012 WL 400421 (9th Cir. Feb. 9, 2012). This contrasts with a prior Ninth Circuit holding that an order denying a motion to remove a trustee was a final order. See Dye v. Brown (In re AFI Holding), 530 F.3d 832 (9th Cir. 2008). Continue reading →

Posted in Analysis

Seventh Circuit in Holly Marine Affirms Exception to Gifting Prohibition

Posted on February 13, 2012 by Kathryn M. Borgeson, Christopher J. Updike, and Douglas Mintz

Since the Second Circuit’s decision in DISH Network Corp. v. DBSD North America, Inc., the continued viability of gift plans – plans that provide for distribution of some portion of senior creditors’ recoveries to junior stakeholders – has been called into question. The United States Court of Appeals for the Seventh Circuit in In re Holly Marine Towing, Inc., recently approved a settlement agreement that included a payment from the debtor’s principals to junior creditors. The Seventh Circuit permitted the gift because it came under chapter 7, as opposed to chapter 11, and involved the principals’ settlement proceeds, rather than estate assets. Thus, the Seventh Circuit held that the gift did not implicate the priority rules of the Bankruptcy Code. Continue reading →

Posted in Plans/Confirmation Tagged , , |

If Your Signature is On It, You’d Better Have Personally Reviewed It

Posted on January 18, 2012 by Kathryn M. Borgeson

That was the admonition Judge Sean H. Lane of the United States Bankruptcy Court for the Southern District of New York recently delivered to a partner and his law firm. The Court held that the partner’s failure to personally review a proof of claim that an attorney at his firm submitted to the Court under the partner’s signature, but which the partner had not personally reviewed, violated Bankruptcy Rule 9011.[i] Continue reading →

Posted in Claims, News Tagged , , |

In re Whittle Development: Just When You Thought Foreclosure Sales Were Sacrosanct …

Posted on September 8, 2011 by John J. Rapisardi, Michael J. Cohen, and Kathryn M. Borgeson

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 |