News & Analysis as of

Equitable Subordination

Illinois District Court Maintains a High Threshold for Equitable Subordination of Insider Secured Loans

In In re SGK Ventures, LLC, Case No. 15 C 11224, 2017 WL 2683686 (N.D. Ill. June 20, 2017), Judge Durkin of the District Court for the Northern District of Illinois sets out a thorough analysis for addressing...more

Ten (plus one) things to consider when you do a leveraged finance deal in Italy

by White & Case LLP on

European Leveraged Finance Alert Series: Issue 6 - Legislative changes in Italy (starting from 2012) facilitated leveraged transactions facilitating security in both bank and bond financings and aligning bond and bank...more

Ten things to consider when you do a leveraged finance deal in Germany

by White & Case LLP on

European Leveraged Finance Alert Series: Issue 2 - As forecasted in our 30 January 2017 publication "European leveraged debt fights back," we expect 2017 to be a year where high yield bonds and covenant light "term loan...more

In re Sentinel Management: The Seventh Circuit Considers Equitable Subordination

by Foley & Lardner LLP on

Equitable subordination in bankruptcy can be a powerful tool, providing a court with considerable latitude to set things right insofar as the estates of the penniless and the rights of their creditors are concerned. But...more

Blog: Illinois Bankruptcy Court Articulates Low Threshold for Equitable Subordination of Insider Secured Loan

by Cooley LLP on

For a distressed company running low on capital, an investment from insiders may represent a last best hope for survival. Insiders may be willing to risk throwing good money after bad for a chance to save the company even...more

Insider Loans Equitably Subordinated

In SGK Ventures, LLC, the Bankruptcy Court for the Northern District of Illinois ordered that the secured claims of two entities controlled by insiders of the debtor be equitably subordinated to the claims of unsecured...more

‘LightSquared’: Defining the Permissible Boundaries of Plan Injunctions

by Morrison & Foerster LLP on

On Oct. 7, 2015, the U.S. District Court for the Southern District of New York vacated a plan injunction that had been approved by the Bankruptcy Court in the Chapter 11 cases of LightSquared and certain of its affiliates...more

In re Alternate Fuels, Inc.: Key Takeaways for Venture Capitalists Working with Emerging Companies

by Dorsey & Whitney LLP on

Venture capitalists (“VCs”) often provide needed debt financing such as bridge loans to emerging companies in financial distress. However, given their insider status with these companies, VCs may encounter issues with such...more

Construction Contract Claims Against a Third-Party Lender? The Unforeseen Consequences of a Standard Practice

For those of us who commonly represent lenders, there is nothing more unsettling than hearing the words “course and pattern of conduct” or “dominion and control” or some variation of the same. Any suit where someone seeks to...more

Equitable Subordination Allowed Even Though First Lienholder Had Constructive Knowledge of Subordinated Mortgage at Closing, S.C....

by Ballard Spahr LLP on

The Supreme Court of South Carolina recently held that a lienholder’s ability to obtain equitable subordination of a prior mortgage was not precluded by its agent’s knowledge that the prior mortgage had not been satisfied. In...more

Equitable Subordination: Construction Lenders Beware

by Pepper Hamilton LLP on

Atlantic Builders Group, Inc. v. Old Line Bank (In re Prince Frederick Inv., LLC), 516 B.R. 778 (Bankr. D. Md. 2014) – A construction contractor contended that the claim of the debtor’s construction lender should be...more

Equitable Subrogation: “Complete and Perfect Justice” Requires Party To Be Without Fault

by Pepper Hamilton LLP on

Ocwen Loan Servicing LLC v. Summit Bank, N.A. (In re Francis), 750 F.3d 754 (8th Cir. 2014) – A lender that attached the wrong legal description to its recorded mortgage sought equitable subrogation and/or reformation...more

Delaware Bankruptcy Court Denies Derivative Standing to Creditor Seeking Recharacterization

by Cooley LLP on

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

Spanish Insolvency Act Amendment Offers Comfort to Parties in Sareb Transactions

by Latham & Watkins LLP on

On November 30, 2013, the Spanish legislator approved a recent amendment to Spanish insolvency law, introduced in March 2013, to clarify that a claim transferred to Spanish “bad bank” Sareb, and subsequently sold by Sareb to...more

A Tale Of Two Debtors: Lehman Brothers And The Availability Of Equitable Subordination In The “Dueling Debtor” Context

by White & Case LLP on

Originally published in the NYU Journal of Law & Business - Vol. 9:269, 2012. This article suggests that the generally accepted “offensive/defensive” standard used by bankruptcy courts to determine whether a debtor may...more

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