Commercial Restructuring & Bankruptcy Newsletter - June 2014

In this issue:

- Are Breakup Fees at Risk?

- Credit Bidding Rights Limited, Capped by Debt Purchase Amount

- Court Upholds Creditor’s Security Interest Despite Post-Petition Lapse of Financing Statement

- Trustee Can Use Lien-Creditor Status and Avoidance Power Defensively, Even After Limitation Period

- Denying Summary Judgment, Court Holds that ORRI May Face Recharacterization as Debt

- Preference Decision May Expand Circumstances in Which Trustees Seek Recovery from Senior and Junior Lienholders

- Liens May Attach Where Parties Clearly Intended, Even Where Deed of Trust is Deficient

- Separate Judgments against Husband’s and Wife’s Guaranties of the Same Loan Cannot Be Consolidated

- Individual Committee Members Must Make a ‘Substantial Contribution’ to Receive Payment of Attorney’s Fees

- Payment of Claimant’s Fees Under Section 506(c) Only Made in Narrow Circumstances

- A New Value Chapter 11 Plan Requires a Genuine Market Test to Avoid Absolute Priority Rule Violation

- Continuing the Split, Court Rules Debtor Has No Possessory Interest in Web Address and Phone Number

- Chapter 11 Debtor May Not Use or Allocate Rents to Bifurcate Creditor’s Claim

- Court Analyzes Whether Hotel Revenues are an Interest in Real or Personal Property

- Court Upholds Insider Releases Because of Substantial Contributions of New Value

- Court Denies Confirmation Because of Failure to Obtain Informed Consent of Third-Party Releases

- Settlement Payment Constitutes Antecedent Debt in Preference Action

- Counsel’s Corner: News from Reed Smith

- Excerpt from Preference Decision May Expand Circumstances in Which Trustees Seek Recovery from Senior and Junior Lienholders:

In re Vassau, 499 B.R. 864 (Bankr. S.D. Cal. 2013)


In a chapter 7 case, the Bankruptcy Court for the Southern District of California held that payments made to a fully secured first lienholder could be preferential transfers as to the undersecured junior creditor, who received no money but received the benefit of an increase in their equity position as a result of the payments paying down its debt.

Please see full newsletter below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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