ABI Blog Exchange

On March 13, 2015, the United States District Court for the District of Delaware, in the case of Walnut Creek Mining Company v. Cascade Investment, LLC, Civ. No. 14-738-LPS (In re Optim Energy, LLC, Bankr. Case No. 14-10262-BLS), affirmed an order of the United States Bankruptcy Court for the District of Delaware which denied derivative standing to the debtor’s largest unsecured creditor, Walnut Creek Mining Company (“Walnut Creek”).  Walnut Creek had sought to file an adversary proceeding seeking to recharacterize or subordinate Cascade Investment, LLC’s (“Cascade”) secured debt.  Cascade had guaranteed the debtor’s debt to Wells Fargo.  When the debtor breached the agreement, Cascade paid Wells, and, by virtue of a reimbursement agreement with the debtor, became a secured creditor of the debtor.
1 week 1 day ago
In an article at CommercialBankruptcyLitigation.com, Adam Stein-Sapir explores the impact a bankruptcy filing can have on a creditor’s efforts to resolve debts owed post-state court litigation, and how a bankruptcy filing can frustrate those efforts. Read more about this interesting article here!
1 week 1 day ago
In an article written at CommercialBankruptcyLitigation.com, Jason Hirsch discusses a recent Fifth Circuit decision related to funds received by the Golf Channel from Stanford International Bank Limited. Read more about the clawback litigation here!
1 week 1 day ago
 a recent article at CommercialBankruptcyInvestor.com, John Peterson discusses whether distressed investing is for the ‘little guy’. Read this important article here
1 week 1 day ago
Not only should regulators investigate the timing of OneWest's charitable donations to supporters of its proposed merger with CIT Group, they should encourage both banks to adopt clear CRA benchmarks that would hold them accountable for future investments in local communities.

Read More from: BankThink

1 week 1 day ago
Four years after the fall of Howrey LLP, another batch of the law firm’s former partners have agreed to settle with its bankruptcy estate. That this time, 47 ex-partners are chipping in $75,000—an average of just $1,595 each—but are also agreeing to drop $6.1 million in claims that they were pursuing in the case, according to court filings. Removing those claims means more money will be available for other creditors. The settlement frees the ex-partners from future Howrey-related liability. Howrey trustee Allan Diamond said in a Tuesday filing in U.S. Bankruptcy Court in San Francisco that the settlement, more than a year in the making, “eliminates contentious claims that would otherwise develop into costly and time-consuming litigation.” Mr. Diamond claimed the ex-partners owed the estate money they earned when Howrey was allegedly insolvent as well as money paid on employment contracts that he alleges were violated. Some of the settling parties had also been pursued for so-called unfinished business claims, which claw back money earned on legal assignments that originated at Howrey and were taken to new firms.

Read More from: WSJ.com: Bankruptcy Beat

1 week 1 day ago
Four years after the fall of Howrey LLP, another batch of the law firm’s former partners have agreed to settle with its bankruptcy estate. That this time, 47 ex-partners are chipping in $75,000—an average of just $1,595 each—but are also agreeing to drop $6.1 million in claims that they were pursuing in the case, according to court filings. Removing those claims means more money will be available for other creditors. The settlement frees the ex-partners from future Howrey-related liability. Howrey trustee Allan Diamond said in a Tuesday filing in U.S. Bankruptcy Court in San Francisco that the settlement, more than a year in the making, “eliminates contentious claims that would otherwise develop into costly and time-consuming litigation.” Mr. Diamond claimed the ex-partners owed the estate money they earned when Howrey was allegedly insolvent as well as money paid on employment contracts that he alleges were violated. Some of the settling parties had also been pursued for so-called unfinished business claims, which claw back money earned on legal assignments that originated at Howrey and were taken to new firms.

Read More from: WSJ.com: Bankruptcy Beat

1 week 1 day ago
Readers, welcome to the latest installment of our ongoing coverage of the Final Report and Recommendations of the ABI Commission to Study the Reform of Chapter 11.  This post’s topic:  trade creditor and employee priorities (discussed in sections IV.D. and V.E. of the Report).  Although the Bankruptcy Code has a general policy of treating like creditors alike (e.g., unsecured creditors generally recover pari passu), this policy is subject to various exceptions – including several that favor a debtor’s employees and certain trade claimants.  The Commission took a close look at these types of priorities and made several key recommendations, described below.  Employee Priorities Sections 507(a)(4) and 507(a)(5)
1 week 1 day ago
Baltimore attorney Jeff Scholnick attended the Maryland State Bar Association in Punta Cana, Dominican Republic from February 14th-21st of this year. Scholnick won a contest of first-time participants to be a featured speaker for the Mid-Year Convention. The contest was open to members of the MSBA who are considered a “First-Time Attendee Lawyer.” He spoke on the subject of “Dealing with Student Loans, Inside and Outside of Bankruptcy.”  

Read More from: Scholnick Law

1 week 1 day ago
The CFPB wants to expand banks' data reporting requirements under the Home Mortgage Disclosure Act. But this would impose even greater costs upon local financial institutions that are already overburdened by regulation.

Read More from: BankThink

1 week 1 day ago
In this Jan. 12 photo, a man takes pictures of Caesars Palace hotel and casino in Las Vegas.
Associated Press
On Wednesday, Caesars Entertainment Operating Co. is scheduled for its next major bankruptcy-court hearing in Chicago, during which the company will ask a federal judge to halt four creditor lawsuits brought against the company’s non-bankrupt parent for asset transfers made before CEOC’s chapter 11 filing. Caesars is arguing that allowing these lawsuits to proceed could “imperil” CEOC’s ability to reorganize. CEOC pointed out in court filings that while the suits against it are automatically halted by the bankruptcy code, suits against parent Caesars Entertainment Corp. and other affiliates not in bankruptcy should also be stopped during the chapter 11 case. CEOC said if they aren’t, money its parent has pledged as part of a proposal to restructure more than $18 billion in debt could be tied up in that litigation. If the suits against the parent and other non-bankrupt affiliates go on, CEOC said, “it would be nearly impossible for CEC to provide any substantial contribution to a reorganization, including the $1.5 billion that it has agreed to contribute.”

Read More from: WSJ.com: Bankruptcy Beat

1 week 1 day ago
In this Jan. 12 photo, a man takes pictures of Caesars Palace hotel and casino in Las Vegas.
Associated Press
On Wednesday, Caesars Entertainment Operating Co. is scheduled for its next major bankruptcy-court hearing in Chicago, during which the company will ask a federal judge to halt four creditor lawsuits brought against the company’s non-bankrupt parent for asset transfers made before CEOC’s chapter 11 filing. Caesars is arguing that allowing these lawsuits to proceed could “imperil” CEOC’s ability to reorganize. CEOC pointed out in court filings that while the suits against it are automatically halted by the bankruptcy code, suits against parent Caesars Entertainment Corp. and other affiliates not in bankruptcy should also be stopped during the chapter 11 case. CEOC said if they aren’t, money its parent has pledged as part of a proposal to restructure more than $18 billion in debt could be tied up in that litigation. If the suits against the parent and other non-bankrupt affiliates go on, CEOC said, “it would be nearly impossible for CEC to provide any substantial contribution to a reorganization, including the $1.5 billion that it has agreed to contribute.”

Read More from: WSJ.com: Bankruptcy Beat

1 week 1 day ago
In a little-noticed November opinion, the Seventh Circuit greatly expanded the ability of a bankruptcy trustee to avoid a security interest for documentation errors under section 544(a)(1) of the Bankruptcy Code.  See State Bank of Toulon v. Covey (In re Duckworth), 776 F.3d 453 (7th Cir. 2014). In Duckworth, the written security agreement stated that it secured a note “dated December 13, 2008,” but the note was not signed until two days later — so it was dated December 15.  Although everyone testified that the security agreement was intended to secure the debt evidenced by the December 15 note, the Court held that the strong arm power allowed the trustee to rely on the written terms of the agreement.  Since there was no December 13 note, there was no secured debt that could support the bank’s security interest and the bank was left unsecured. The section 544(a) strong arm power gives the trustee the powers of a hypothetical lien creditor and is regularly used to attack defects in a UCC financing statement.  In that context, errors in the debtor’s name or the collateral description may lead to avoidance of a security interest.  However, minor errors that are not seriously misleading are excused.  See UCC § 9-506(a).

Read More from: GT Restructuring Review

1 week 1 day ago
On March 17, 2015, Quicksilver Resources Inc. and certain affiliates (collectively, the “Debtors” and when combined with certain non-debtor affiliates, the “Company”) filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware.    According to the first day declaration of Vanessa Gomez LaGatta, the Company’s Senior Vice President, Chief Financial Officer and Treasurer (such declaration being the “LaGatta Declaration”), the Company is an independent producer of oil and gas with interests in (i) the Barnett Shale in the Forth Worth Basin in north-central Texas; (ii) the Delaware Basin in western Texas; (iii) the Horn River Basin in British Columbia, Canada (the “Horn River Basin Assets”); and (iv) the coalbeds of the Horseshoe Canyon in Alberta, Canada (together with the Horn River Basin Assets, the “Canadian Assets”).  See LaGatta Declaration at 8-10. The Company’s non-debtor affiliates are composed on Canadian entities holding interests in the Canadian Assets.  The Company has not commenced an insolvency case in Canada and the lenders to the Canadian affiliates have entered into a forbearance agreement that expires on June 16, 2015. See LaGatta Declaration at 9-10 and 20-21.
1 week 1 day ago
Receiving Wide Coverage ... Not the Best: Bank of New York Mellon agreed to pay $714 million to settle litigation that accused the custody bank of defrauding clients on currency transactions. Stemming from a lawsuit filed in February 2011, the Manhattan U.S. Attorney and the New York State Attorney General said BNY Mellon gave some clients worse prices on foreign currency trades than promised. Put another way, BNY Mellon promised "best execution" of the foreign-currency trades,...

Read More from: BankThink

1 week 1 day ago
A workman repairs the store front of a closed RadioShack location after the sign was removed in Springfield, Va., on March 12.
Shawn Thew/European Pressphoto Agency
Standard General LP’s buyout offer for RadioShack Corp. is the retailer’s only hope of surviving bankruptcy, albeit in a much smaller form, and of staving off complete liquidation, lawyers said Thursday. The Wall Street Journal has the Daily Bankruptcy Review article here. (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit http://on.wsj.com/DJBankruptcyNews, scroll to the bottom and click “try for free.”) WSJ reports that Caesars Entertainment’s most valuable asset in tis bankruptcy feud is the $1 billion customer loyalty program.

Read More from: WSJ.com: Bankruptcy Beat

1 week 1 day ago
A workman repairs the store front of a closed RadioShack location after the sign was removed in Springfield, Va., on March 12.
Shawn Thew/European Pressphoto Agency
Standard General LP’s buyout offer for RadioShack Corp. is the retailer’s only hope of surviving bankruptcy, albeit in a much smaller form, and of staving off complete liquidation, lawyers said Thursday. The Wall Street Journal has the Daily Bankruptcy Review article here. (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit http://on.wsj.com/DJBankruptcyNews, scroll to the bottom and click “try for free.”) WSJ reports that Caesars Entertainment’s most valuable asset in tis bankruptcy feud is the $1 billion customer loyalty program.

Read More from: WSJ.com: Bankruptcy Beat

1 week 1 day ago
It has been nearly four years since April 17, 2011, the original deadline under Dodd-Frank for the SEC to adopt a resource extraction disclosure rule.  After the SEC adopted a rule 2012, the U.S. District Court for the District of Columbia vacated it the next year, which we previously discussed here.  The court remanded it to the SEC, and it has not been re-proposed since then.
1 week 2 days ago
Although I keep swearing off the topic, I've written something about chapter 11 professional fees.  Again.  Over at Dealb%k.

Read More from: Credit Slips

1 week 2 days ago

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