Wednesday, March 20, 2013
In Village at Camp Bowie I, L.P. there was substantial equity in the property, meaning the secured creditor was fully secured. Knowing that the secured creditor was going to vote against the plan, the debtor placed the unsecured creditors, thirty-eight trade creditors owed $59,398 in a class, which class was deliberately impaired by the debtor, by providing that they would receive full payment not on the effective date, but instead three months later.
Thursday, February 28, 2013
Dichter-Mad Family Partners v. United States, Case No. 11-55577 (9th Cir. 2013). The district court held that the “discretionary function” of the Federal Tort Claims Act (“FTCA”) precluded suits against the SEC for actions (or omissions) in the investigation and ultimate prosecution of the Madoff Ponzi scheme. In large part, the Ninth Circuit simply adopted the extensive and detailed ruling of the district court.
Four investors of Madoff filed suit in the Central District of California alleging negligence by the SEC in the investigation of Madoff. The plaintiffs asserted that the SEC was negligent in its investigation of the Madoff Ponzi scheme. The heart of the plaintiffs’ complaint is that the SEC could have discovered the Madoff fraud as early as 1992 had the SEC conducted a proper investigation. Accordingly, the plaintiffs asserted the SEC was liable for their losses in the Madoff Ponzi Scheme.
Wednesday, February 27, 2013
Restructuring Support Agreement Not an
Improper Solicitation, Consent to Third Party
Releases Can Be Inferred From Failure to Act
In re Indianapolis Downs LLC. Two aspects of the decision are of unique importance.
When Indianapolis Downs, a racino in Indiana, filed bankruptcy, it had first lien debt of $98,000,000, second lien debt of $375,000,000 and third lien debt of $78,000,000. Following the filing of the Debtor’s bankruptcy petition, the Debtor, the holder of the third lien and an Ad Hoc Committee of second lien holders (the “Ad Hoc Committee”) engaged in a process of litigation and negotiation that culminated in a Restructuring Support Agreement pursuant to which the Debtor agreed to pursue a parallel path to either sell or recapitalize the business. The Restructuring Support Agreement set forth the details of the parallel path, prohibited the parties from supporting opposing plans and required them to vote “yes” for a plan that conformed to the Restructuring Support Agreement. Thereafter, the Debtor filed its Plan and Disclosure Statement (both of which thoroughly described the Restructuring Support Agreement, which was also filed with the court) and as part of the Debtor’s effort to sell the business, received a bid in excess of $500,000,000 for its assets.
Friday, February 22, 2013
In Castleton Plaza LP, the United States Court of Appeals for the Seventh Circuit was confronted with a new value plan that had been confirmed by the Bankruptcy Court where the new value was contributed by an insider relative of old equity, rather than old equity itself. The Bankruptcy Court had held that such a plan would not be subject to the auction requirements of 203 North LaSalle.
Monday, January 28, 2013
A recent opinion out of the Southern District of Texas reminds attorneys that bankruptcy is not a strictly paperless practice, by highlighting the importance of maintaining the original signed version of electronic documents filed with the Court. In re Stomberg, Bankr. S.D.Tex., January 10, 2013 (No. 10-41603) (sanctioning Debtor’s counsel due to failure to be able to produce signed copies of schedules and statement of affairs).
Thursday, December 13, 2012
posted, the Sixth Circuit Court of Appeals held that Stern vs. Marshall’s limitations on the jurisdiction of bankruptcy courts were not waivable. On December 4, 2012, the Ninth Circuit Court of Appeals ruled to the contrary. Executive Benefits Insurance Agency v. Arkison (In re Bellingham Insurance Agency, Inc., Debtor).
In Bellingham, EBIA was sued by Trustee Arkinson, alleging various fraudulent transfers and also alter-ego and successor-liability claims. EBIA initially moved to withdraw the reference on the grounds that it was entitled to a jury trial, but stayed consideration of its motion to permit the Bankruptcy Court to adjudicate the Trustee’s Motion for Summary Judgment. After the Bankruptcy Court ruled against it, EBIA abandoned the Motion to Withdraw, the District Court dismissed that action and EBIA appealed the summary judgment ruling to the District Court. EBIA did not raise any objections to subject matter jurisdiction or the power of the Bankruptcy Court to act until the matter reached the Ninth Circuit.
Saturday, November 24, 2012
Waldman v. Stone, decided October 26, 2012, the Court may have significantly expanded the intended reach of a 2011 Supreme Court decision, Stern v. Marshall, 131 S.C.T. 2594 (2011).
In Stern v. Marshall, the Supreme Court held that Bankruptcy Court Judges, as Article I Judges and not Article III Judges under the United States Constitution, could not exercise Article III judicial power to decide state law cause of action even where such state cause of action was arguably a core proceeding under 28 U.S.C. §157. Under 28 U.S.C. §157 bankruptcy judges can enter final judgments in core proceedings but can only make recommendations to the District Court in non-core proceedings unless the parties consent.