All items from Business Finance & Restructuring News - Weil

Despite a valiant effort by the United States Bankruptcy Court for the District of New Mexico to give the debtor the benefit of every conceivable doubt, the debtor in In re Deming Hospitality, LLC  was unable to obtain approval of its proposed disclosure statement over the objections of, among others, a junior lien holder.  The junior lien holder objected to approval of the debtor’s proposed disclosure statement on the grounds that the debtor’s proposed chapter 11 plan was “facially unconfirmable.” 
The debtor’s proposed plan provided the following classifications relevant to the junior lien holder’s objection:

NORTH OF THE BORDER UPDATE
This article has been contributed to the blog by Mary Paterson and Patrick Riesterer. Mary Paterson is a senior associate in the litigation group of Osler, Hoskin & Harcourt LLP and Patrick Riesterer is an associate in the insolvency and restructuring group of Osler, Hoskin & Harcourt LLP.
In the ongoing Sino-Forest Corporation insolvency saga, the Ontario Superior Court of Justice approved: (i) a settlement of the class action against Ernst & Young LLP and (ii) a plan of compromise and arrangement in respect of Sino-Forest filed in the proceedings commenced by Sino-Forest under the Companies’ Creditors Arrangement Act. Among other things, the Plan provided Ernst &Young with a third party release of all claims against it in the Sino-Forest class action.

A debtor in a foreign insolvency proceeding may petition a United States bankruptcy court for recognition of the foreign proceeding under chapter  15 of the Bankruptcy Code, which provides certain relief similar to that provided to debtors in bankruptcy cases pending in the United States and its territories.  When a foreign debtor seeks such recognition of its bankruptcy proceeding, a U.S. court must determine the location of the foreign debtor’s “center of main interests” (COMI).  If the debtor’s COMI is located in the same jurisdiction where the insolvency proceeding is taking place, the proceeding is recognized as a “foreign main proceeding,” and certain sections of the Bankruptcy Code (such as the automatic stay set forth in section 362) will apply to the debtor and any of its property located in the United States.  If the debtor’s COMI is located in a different jurisdiction than where the insolvency proceeding is pending, the proceeding may be recognized as a “foreign nonmain proceeding.”  Under such circumstances, the bankruptcy court has discretion to grant the foreign debtor the protection of the automatic stay.

Our loyal readers might recall that on Tax Day, we published the first installment of our four-part series on United States v. Bond, a decision from the United States District Court for the Eastern District of New York, which examines actions for federal income tax refunds sought by three affiliated telecommunications entities (collectively referred to in this series as “PT-1”). In this installment, we examine the court’s discussion of whether sections 106(a) and 106(b) of the Bankruptcy Code had waived the sovereign immunity of the Internal Revenue Service with regard to tax refund actions filed by the trustee of the liquidating trust that succeeded to PT-1’s assets. In our third installment, we will discuss whether the bankruptcy court had jurisdiction to compel the IRS to accept a tax return filed by PT-1. Finally, our fourth installment will focus on whether the bankruptcy court had jurisdiction to enjoin the IRS from its future exercise of setoff or recoupment rights against the trustee.
Waiver of Sovereign Immunity