Commercial Bankruptcy

News & Analysis as of

"Recent Cases Highlight Potential Pitfalls for Distressed Investors"

Despite lower-than-average Chapter 11 activity in 2014, the legal landscape for distressed investors has continued to evolve, with significant legal developments in credit bidding, make-whole premiums and intercreditor...more

Real Estate Cases: Bad Faith Filing Does Not Necessarily Mean That You Are A Bad Person

In re Sterling Bluff Investors, LLC, 515 B.R. 902 (Bankr. S.D. Ga. 2014) – A mortgagee moved to dismiss a real estate debtor’s chapter 11 case, or in the alternative for relief from the automatic stay. It contended...more

Mistakes and Regrets: UCC Filing Error Terminates Security Interest

Action Item: When a secured loan is being paid off, lenders routinely authorize the borrower’s counsel to prepare and file UCC termination statements releasing the lender’s security interest in the borrower’s property. ...more

Mistakenly Filed UCC Termination Statement Results in Lender’s $1.5 Billion GM Bankruptcy Unsecured Loan

On October 20, 2014, we issued a Legal News Alert commenting on a decision of the Delaware Supreme Court, on certification from the Second Circuit, regarding the effect of a mistaken UCC-3 termination statement. The Delaware...more

Typo Disastrous for Lender

The United States Court of Appeals for the Seventh Circuit recently issued a harsh opinion for lenders in In re: David L. Duckworth. The case provides a startling example of the drastic consequences of failing to carefully...more

River Road: A Cautionary Tale for Chapter 11 Financial Advisors

The United States Bankruptcy Court for the Northern District of Illinois recently handed down an opinion, In re River Road Hotel Partners LLC, 2014 WL 5488259 (Bankr. N.D. Ill. 2014), dealing with the issue of a financial...more

A New Tool for Holdout Bondholders: The Trust Indenture Act

Restructuring decision broadly interpreting bondholder protections under the Trust Indenture Act may significantly impact out-of-court restructurings. On December 30, 2014, the US District Court for the Southern...more

A Cautionary Tale – The Need for Bank Oversight on Collateral Releases

Beware!! The story brought to us today courtesy of the Second Circuit Court of Appeals (In re: Motor Liquidation Co., 13-2187) is one that should strike fear into the hearts of all bankers and lawyers. It is a cautionary tale...more

Post-Confirmation: Ignoring Court Orders Is Not A Good Idea

In re Castle Home Builders, Inc., 520 B.R. 98 (Bankr. N.D. Ill. 2014) – The debtors obtained confirmation of plans of reorganization that restructured prepetition mortgage loans.  When the servicer for some of the...more

Denial of Plan Confirmation and Finality - Supreme Court's Resolution of Circuit Split May Apply to Chapter 11

The Supreme Court has agreed to hear Bullard v. Hyde Park Savings Bank (In re Bullard), U.S., No. 14-116 (cert. granted 12/12/14). The Court's decision in this case will resolve a circuit split with regard to whether an order...more

2014 New York Hydraulic Fracturing Caselaw Update

As we approach the end of 2014, it may be useful to reflect on the impact of several important court cases decided in New York this year relating to oil and gas. While the decisions have mainly been against the industry and...more

Second Circuit Denies Petition for En Banc Review of Fairfield Decision

On January 13, 2015, the U.S. Court of Appeals for the Second Circuit denied a petition for en banc review of the Second Circuit’s September 2014 panel decision holding that bankruptcy courts are required to review the...more

Business Law Newsletter - January 2015

In This Issue: - FirstPay Decision: IRS Bests Trustee in Local Tax Case - Privacy Policies for Mobile Apps: One Size Does Not Fit All - Trademark Fees are Decreasing - Excerpt from Trademark Fees are...more

Bankruptcy Sales: “It Ain’t Over ’Til It’s Over”

Great Plains Royalty Corp. v. Earl Schwartz Co. (In re Great Plains Royalty Corp.), 520 B.R. 292 (Bankr. D. N.D. 2014) – Two companies that acquired assets in a bankruptcy auction moved to reopen the case to clarify...more

FirstPay Decision: IRS Bests Trustee in Local Tax Case

A decision last month from the U.S. Court of Appeals for the Fourth Circuit marks a disappointing end to a decade-long tax case affecting many Washington-area businesses. The case, Wolff v. United States of America, Adversary...more

If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

In the not too distant past, there was a school of thought that a covenant not to sue (CNTS) had a different legal effect than a patent license in the US. Differences I frequently heard included a CNTS does not run with the...more

Proof of Claim: Foreign Qualification Requirements May Be More Important Than You Thought

In re Flex Fin. Holding Co., 518 B.R. 891 (Bankr. D. Kan. 2014) – A landlord filed a proof of claim for ~$1.34 million for a debtor’s prepetition breach of its lease. The debtor objected based on the landlord’s...more

Recommendations of the ABI Commission to Study the Reform of Chapter 11: Intellectual Property Licenses

Beginning in 2012, a distinguished group of bankruptcy attorneys, academics and judges known as the American Bankruptcy Institute (ABI) Commission to Study the Reform of Chapter 11 (the Commission) held periodic meetings...more

The valuation process for LIHTC projects in financial distress – Part I

Note: This post is part of a continuing series on the Credit Report Blog on the subject of workouts and bankruptcies involving low-income housing tax credit (LIHTC) projects. In a previous post, we wrote about the...more

Local Bar Association Files Amicus Brief in Baker Botts v. ASARCO Case

Baker Botts L.L.P. et al. v. ASARCO L.L.C., currently pending before the Supreme Court of the United States, is of particular interest to bankruptcy practitioners because this decision will have far-reaching effects regarding...more

AIRA / BBA Joint Bankruptcy & Restructuring Seminar in Miami

On Tuesday, January 13, I will serve as a moderator for a panel at the Joint Bankruptcy & Restructuring Seminar, presented by both the Association of Insolvency and Restructuring Advisors and the Bankruptcy Bar Association,...more

Review Twice, File Once, Review Again; UCC-3 Termination Intent Irrelevant

A “UCC-3 Termination Statement” is commonly used in secured transactions by a secured party to put the world on notice that the perfected security interest referenced in the UCC-3 filing is terminated. On October 17, 2014,...more

Construction Contracts: Nothing Beats a Meeting of the Minds

Waldschmidt v. Singletary Construction LLC (In re Tackett), 516 B.R. 498 (Bankr. M.D. Tenn. 2014) – A bankruptcy trustee sought turnover of profits from the sale of homes constructed by a contractor. The trustee...more

Overview of ABI Commission Report and Recommendation on the Reform of Chapter 11 of the Bankruptcy Code

The last major revision to U.S. business reorganization laws occurred in 1978. Since then, companies’ capital structures have become more complex and rely more heavily on leverage, including secured debt in particular; their...more

Delaware Bankruptcy Court Grants Summary Judgment Based On Ordinary Course of Business Defense

On December 18, 2014, Bankruptcy Judge Christopher Sontchi issued an opinion granting summary judgment in favor of defendant and against trustee who sought to avoid and recover $1,181,583.84 as preferential transfers pursuant...more

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