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Clawback Suit Targets International Investors

In 2008, a few months before the $65 billion Madoff Ponzi scheme fell apart, the $3.65 billion Petters Ponzi scheme made headlines. Tom Petters told investors that they were financing the purchase and sale of consumer...more

The U.S. Supreme Court Clarifies the Procedure for Unconstitutional “Core” Matters Under Stern v. Marshall in Executive Benefits...

In 2011, the U.S. Supreme Court decided Stern v. Marshall, 131 S.Ct. 2594. In Stern, the Court was faced with the question of whether the Bankruptcy Court had statutory and Constitutional authority to decide a counterclaim...more

Ruling Explains and Extends Application of Good Faith Defense to Fraudulent Transfer Actions in SIPA Context

In an April 27, 2014 decision in the Madoff cases, Judge Jed S. Rakoff ruled that the standard of good faith should be considered differently in a Securities Investor Protection Act (SIPA) liquidation. To defeat a good faith...more

U.S. Supreme Court Clarifies Bankruptcy Court Jurisdiction but Leaves Some Questions Unanswered in Executive Benefits Insurance...

The Supreme Court issued its decision in the closely followed case of Executive Benefits Insurance Agency v. Arkison, Chapter 7 Trustee of Estate of Bellingham Insurance Agency, Inc., 573 U.S. ___ (2014) (Bellingham) this...more

Garlock Court Grants Access to Sealed Documents Demonstrating a Widespread Pattern of Manipulation of Exposure Evidence

Ford Motor Company recently obtained access to previously sealed testimony and exhibits that formed the basis for a bankruptcy court’s January 10, 2014 Order finding a widespread pattern of demonstrable misrepresentation by...more

Supreme Court Upholds Limited Bankruptcy Court Jurisdiction Over Defendants in Fraudulent Transfer Actions; Leaves an Open Door to...

On June 9, 2014, the Supreme Court issued a decision in Executive Benefits Insurance Agency v. Arkison, a case that tested the extent of the jurisdiction of bankruptcy court judges to decide fraudulent transfer and certain...more

Supreme Court Decides Executive Benefits Insurance Agency v. Arkison

In Executive Benefits Ins. Agency v. Arkison, No. 12-1200, the Supreme Court ruled that when Article III does not permit a bankruptcy court to enter final judgment on a core bankruptcy claim, the bankruptcy court may issue...more

Delaware Bankruptcy Court Denies Derivative Standing to Creditor Seeking Recharacterization

In that case, Walnut Creek Mining Company (“Walnut Creek”), the debtor Optim Energy’s largest unsecured creditor, sought standing to pursue recharacterization, equitable subordination, and fiduciary duty claims on behalf of...more

Bankruptcy Court Shields Equity Sponsors Serving as Secured Lenders from Individual Creditor Seeking to Litigate Subordination and...

In a recent case — In re Optim Energy, LLC — the Delaware Bankruptcy Court denied an individual creditor’s request to pursue the subordination or recharacterization of the claims of secured lenders who were also the debtors’...more

Connecticut District Court Affirms Ruling that Collateral Estoppel Effect of California Judgments for Fraud Established Them as...

Debts based on fraud are not dischargeable in bankruptcy, but to achieve that result the aggrieved creditor must ordinarily commence a non-dischargeability action and prove the fraud. However, when an action for fraud is...more

California Court: Commercial Crime Policy Rescinded Due To Insured’s Material Misrepresentation Concerning Handling of Funds

Kurtz v. Liberty Mutual Insurance Co., et al., Case No. 2:11-cv-7010 (C.D.Cal. April 14, 2014), was an insurance coverage dispute arising out of the downfall of Los Angeles businessman Ezri Namvar who has also been referred...more

Can a Receiver Be Liable for Acts or Omissions that Occurred in a Case After Discharge?

The court has approved my final account and report, discharged me as receiver and exonerated my bond in a difficult, litigious case I am glad to have over. An elder receiver I know told me I could still be liable for acts or...more

Court Rules Houston Astros Cannot Strike Out Fiduciary Duties in Bankruptcy

Introduction - One of the incentives that Delaware law offers founders of business entities is the ability to tinker with the fiduciary duties that the managers of the business owe. While the duties owed by corporate...more

First Circuit Finds that a Private Equity Fund Can Be Liable for the Pension Obligations of its Portfolio Company

In Sun Capital Partners III, L.P. et al. v. New England Teamsters & Trucking Industry Pension Fund, No. 12-2312, 2013 WL 3814985 (1st Cir. July 24, 2013), the First Circuit held that a private equity fund could be liable for...more

Bankruptcy Spurred By Court Judgment May Proceed For The Proper Purpose Of Reorganization; Judge's Adversarial Rulings And Remarks...

In In Re J. Howard Marshall (--- F.3d ----, C.A.9 (Cal.), June 28, 2013), the United States Court of Appeals considered the validity of a Chapter 11 bankruptcy filing. The bankruptcy had been challenged because it was...more

Fifth Circuit Applies Moench Presumption of Prudence at Motion to Dismiss Stage

The Fifth Circuit recently joined four other circuits (the Second, Third, Seventh and Eleventh Circuits) in holding that the presumption of prudence applicable in employer stock fund cases is appropriately applied at the...more

U.S. Supreme Court Resolves Circuit Split in Bullock v. BankChampaign, N.A.

One of the primary purposes of bankruptcy is to provide for the discharge of certain debts in order to enable a debtor to obtain a "fresh start" post-bankruptcy. Notwithstanding this specific purpose, section 523 of Title 11...more

Securities Class Representative Cannot Object to Bankruptcy Release on Behalf of Class

The US District Court for the Southern District of New York affirmed an order rejecting an objection to the confirmation of a Chapter 11 Plan of Reorganization for Dynegy, Inc. and Dynegy Holdings, LLC (together, Dynegy) for...more

Ninth Circuit Rejects Class Action Settlement Providing Conditional Incentive Awards

Earlier this week, the United States Court of Appeals for the Ninth Circuit reversed approval of a $45 million class action settlement that had been reached with three credit reporting agencies in Radcliffe v. Experian...more

In re Canopy Financial, Inc.: A Primer From the Seventh Circuit on Excusable Neglect

What is “excusable neglect” under Fed. R. Civ. P. 60(b)(1)? The answer is that it depends, but generally it’s not much. That’s the first lesson from the Seventh Circuit’s recent decision in In re Canopy Financial, Inc., No....more

North Carolina Court of Appeals Allows Borrower to Take Breach of Fiduciary Duty Claims Against Lender to a Jury

In what may be a first for a North Carolina appellate court, the North Carolina Court of Appeals has reversed the entry of summary judgment for a lender on a borrower’s breach of fiduciary claim. In Dallaire v. Bank of...more

Rogers Towers: The Right to Trial by Jury in Fraudulent Transfer Actions in Bankruptcy

Suppose you have been sued by the bankruptcy trustee for an alleged fraudulent transfer or a preferential payment. Who decides the case—the bankruptcy judge or a jury? This post explores the circumstances in which parties to...more

Second Circuit Affirms Arbitration Panel’s Finding That A Securities Clearing Firm May Be Liable As The “Initial Transferee” Of A...

On July 3, 2012, the United States Court of Appeals for the Second Circuit refused to vacate an arbitration award against Goldman Sachs Execution & Clearing, P.C. The Court left intact the arbitration panel’s finding that the...more

Whalen: Go Back To The Future To Fight Fraud With Equity Receivers [Video]

May 23 (Bloomberg Law) -- Chris Whalen, senior managing director at Tangent Capital Partners, and Bill Rochelle from Bloomberg News talk with Bloomberg Law's Lee Pacchia about how the so-called in pari delicto defense stops...more

Just When I Thought I Was Out . . . Eleventh Circuit Rules in TOUSA that Refinanced Lenders Can Be “Pulled Back In” and Held...

On May 15, 2012, the Eleventh Circuit Court of Appeals upheld a ruling by the U.S. Bankruptcy Court for the Southern District of Florida, which required certain lenders to return $403 million in prepetition payments they had...more

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