All items from Bankruptcy Law Watch


Nikolaus J. Caro

Unlike real estate transactions where a lender can obtain title insurance, secured lenders are often relying upon the representations and warranties in their loan agreement and the borrower’s audited financial statements, if and when determining whether the collateral securing their loans is owned by the borrower or another pledgor.  After default, a lender may find itself in a precarious position whereby it is unable to foreclose on the collateral because it is not owned by its borrower and it does not have a pledge from the person that actually does own the property.  According to the Third Circuit, however, certain oversights may not affect the lender’s position as a secured creditor.   In In re WL Homes 534 Fed. Appx. 165 (3d Cir. 2013), the court dealt with the issue of whether or not a deposit account owned by a wholly-owned subsidiary of the debtor was properly pledged despite the fact that the owner of the deposit account did not sign a pledge agreement.  



Posted 21 weeks 4 hours ago


Ramesh
Dhanaraj

Since the financial crisis, sales under Section 363 of the Bankruptcy Code have provided an increasingly popular way for secured creditors of distressed businesses to recover their loans.  However, despite the advantages of Section 363 sales, the significant expense and time required to conduct a Bankruptcy sale has caused secured creditors to pursue less comprehensive solutions.  One alternative for recouping value from a troubled loan is an Article 9 foreclosure sale under the Uniform Commercial Code (UCC).
Article 9 (Part 6) of the UCC provides certain statutory remedies to all secured lenders, whether or not such remedies are expressly provided by the security agreement entered into by the lender and the borrower in a lending transaction.  If a borrower defaults under its loan agreement, Article 9 entitles a secured lender to pursue certain rights and remedies with respect to the lender’s collateral (for which a lien may be perfected under Article 9) as set forth in the parties’ security agreement and in Article 9 itself.



Posted 31 weeks 6 days ago


Linor Shohet

A June 2013 decision from the United States Bankruptcy Court for the Eastern District of North Carolina Greenville Division, In re L.L. Murphrey Company, 2013 WL 2451368 (Bankr. E.D.N.C. June 6, 2013), highlights the importance of due diligence in connection with assignments of security interests.
L.L. Murphrey Company (the “debtor”) filed a voluntary Chapter 11 petition on June 8, 2000.  In 2000, the debtor was in default to Wachovia Bank, N.A. (“Wachovia”) for approximately $12,800,000 secured by the debtor’s real property and personal property by appropriate loan documents (“PreBankruptcy Loan Documents”). 
In July 2001, the court confirmed a plan of reorganization, which restructured the debt  into two notes and provided that:



Posted 34 weeks 2 days ago


Linor Shohet

A June 2013 decision from the United States Bankruptcy Court for the Eastern District of North Carolina Greenville Division, In re L.L. Murphrey Company, 2013 WL 2451368 (Bankr. E.D.N.C. June 6, 2013), highlights the importance of due diligence in connection with assignments of security interests.
L.L. Murphrey Company (the “debtor”) filed a voluntary Chapter 11 petition on June 8, 2000.  In 2000, the debtor was in default to Wachovia Bank, N.A. (“Wachovia”) for approximately $12,800,000 secured by the debtor’s real property and personal property by appropriate loan documents (“PreBankruptcy Loan Documents”). 
In July 2001, the court confirmed a plan of reorganization, which restructured the debt  into two notes and provided that:



Posted 34 weeks 2 days ago


Sara L. Chenetz


John E. Lucian

Section 363 asset purchases offer opportunities—but you have to know what you're doing.
 

The economic downturn of recent years has provided opportunities for buyers to acquire operating assets at low prices, and those sales often occur through pending bankruptcy cases. This happens so frequently that Chapter 11 bankruptcy cases now typically involve the sale of all or significant parts of a business's operating assets.



Posted 1 year 22 weeks ago


Linor Shohet

An October 2011 decision from the United States District Court for the Northern District of New York highlights the importance of correctly taking all of the steps necessary to obtain a security interest in commercial tort claims under the U.C.C.
In Algonquin Power Income Fund v. Christine Falls of New York, Inc., 2011 WL 6178802 (N.D.N.Y. 2011), Trafalgar Power, Inc. and Christine Falls of New York, Inc. (collectively, “Trafalgar”) borrowed $22.5 million in secured financing from an insurance company to develop six power plants.  Approximately one year later, Trafalgar brought suit against the engineering firm that designed the power plants and one of its engineers for miscalculations that resulted in an estimate of energy production and thus income which far exceeded what the power plants were able to attain.  After the loan was restructured, Algonquin Power Income Fund and its affiliates (collectively, “Algonquin”) purchased two notes that secured the loan.



Posted 2 years 6 weeks ago

Industrial Enterprises of America, Inc. v. Burtis (In re Pitt Penn Holding Co., Inc.), Case No. 09-11475 (BLS) (Jointly Administered), Adv. No. 11-51868 (BLS) (January 24, 2012) (J. Shannon) 

Victoria A.
Guilfoyle

In this decision, the U.S. Bankruptcy Court for the District of Delaware was faced with an issue of first impression in the 3rd Circuit: whether the two year look-back period set forth in § 548 of the Bankruptcy Code is subject to equitable tolling.  The court held that it was not.
Pitt Penn Holdings, Inc. and its affiliated debtors filed Ch. 11 petitions in the Bankruptcy Court for the District of Delaware on May 1, 2009 as a result of the massive securities fraud that was perpetuated by the Debtors’ CEO, John Mazutto.  The Debtors sought to recover millions of dollars of stock that Mazzuto improperly gave to friends, family and institutions, including his alma mater (Yale University) and former preparatory school (Tabor Academy).  Accordingly, the Debtors filed several adversary proceedings to recover, pursuant to § 548, allegedly fraudulent transfers. 



Posted 2 years 8 weeks ago


Harvey Forman
 


Mathew
Rotenberg


Scott Budzenski
 



Posted 2 years 10 weeks ago