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“Render unto Caesar the things that are Caesar’s, and unto [CEC] the things that are [CEC’s] [?]” – Matthew 22:21 (as revised) Last week, Judge Shira Scheindlin issued a much-awaited decision in the pending litigation over the so-called “parent guarantee” in connection with the Caesars bankruptcy case.  We discuss the decision in a two-part series beginning today.  But before we go any further, the short, short version:
  • The Trust Indenture Act (TIA) prohibits certain nonconsensual impairment of certain noteholders rights.
  • Courts are divided regarding what kind of impairment violates the TIA.
  • Judge Scheindlin (S.D.N.Y.) held that the applicable provision of the TIA bars impairment of the right to payment, as well as the right to bring suit, but only with respect to nonconsensual (i) amendments to core terms of a debt instrument or (ii) out of court debt reorganizations.
  • Judge Scheindlin further held that any alleged impairment must be evaluated as of the date that a payment becomes due, rather than the date of the transaction ultimately giving rise to the alleged impairment.
  • Judge Scheindlin certified questions regarding the interpretation of the TIA to the Second Circuit.
12 hours 11 min ago
This ruling, handed down today by the Second Circuit, may spell the end of one phase of the NML litigation. For some time, the plaintiffs have been trying to find a way to seize assets held by Argentina's central bank. Their latest effort sought an order declaring that Banco Central is an alter ego of Argentina, at least insofar as U.S. law is concerned. The effect of such an order would be to eliminate the bank's claim to be treated as a separate legal entity, making it liable for the government's debts. I understand that Banco Central has already moved most if not all of its assets out of the U.S., and earlier Second Circuit rulings already protect funds held at the Federal Reserve Bank of New York. But the plaintiffs could have taken the order to another country where Banco Central has assets and (conceivably) parlayed it into an order allowing them to attach bank funds. 

Read More from: Credit Slips

12 hours 37 min ago
By: Steven P. Taylor Law Office of Steven P. Taylor, P.C. August 31, 2015 Commonly, in consumer bankruptcy cases, Debtors have attempt resolve their financial issues by raiding their retirement accounts. For those debtors that are younger than 59 ½ years of age, this leads to the 10% additional tax (an “exaction”) of the withdrawn amount as part of their current tax bill in addition to the normal income tax. Bankruptcy may be an appropriate method to deal with tax debt and other times it’s not-and something like the Offer in Compromise program may be a much better option than bankruptcy tax relief. In the bankruptcy world, whether the Internal Revenue Service has assessed a “tax” or “tax penalty” has different implications. The priority scheme treats income taxes and tax penalty claims differently. Income taxes that a debtor owes to the government are entitled to eighth priority distribution under § 507 of the Bankruptcy Code which are not dischargeable. In contrast, tax penalties that do not compensate for the government’s actual pecuniary loss are subordinated to general unsecured claims and are dischargeable.
13 hours 25 min ago
Divorce causes stress and amplified emotions for all family members. Once you realize you must also reconcile marital debt, you can double the stress for you and your spouse. Filing a Kenosha bankruptcy before divorcing, preferably jointly, can be a great solution to marital debt problems. We’ve put together a list of seven reasons why filing a Kenosha bankruptcy before divorcing may be the perfect option for you and your spouse. 1. Filing bankruptcy jointly before a divorce to save money. When you file a joint Kenosha bankruptcy, debts can be cleared under one bankruptcy case, thus saving a lot of money on court and attorney fees. If you qualify for a Chapter 7 Kenosha bankruptcy, you both can eliminate unwanted debts, such as your credit card and medical debt. A bankruptcy may also decrease your divorce costs as well; you will avoid arguing over debt and simplify your divorce filing.

Read More from: Wynn at Law, LLC

14 hours 18 min ago
On August 4, 2015, we posted: “Equitable Mootness In The Third Circuit: Dead Or Alive?”, which analyzed the Third Circuit’s opinion in In re One2One Communications.   The post predicted that Judge Krause’s concurrence would likely result in further opinions on equitable mootness.  Less than a month later we have such an opinion.  In Aurelius v. Tribune, 14-3332 (3d Cir. August 19, 2015) (the “Tribune Opinion”), a different panel of the Third Circuit addresses equitable mootness, and in a concurring opinion replies to Judge Krause’s concurrence. Background In December 2007, the Tribune Company (which published the Chicago Tribune) became the subject of a leveraged buy-out (“LBO”).  The LBO failed, Chapter 11 followed, and a creditor committee promptly filed suit on account of “LBO-Related causes of action”.

Read More from: eSQUIRE Global Crossings

15 hours 18 min ago
Duck Commander Family Foods and Chinook USA
A Kentucky beverage maker is protesting a $250,000 bill that “Duck Dynasty” stars charged for appearance fees, arguing that Si Robertson (aka “Uncle Si”) was a no-show when it came to promoting an ice tea drink named after him. In recently filed court papers, lawyers for the bankrupt maker of Uncle Si’s Iced Tea asked a federal judge to cancel the bill from Duck Commander Inc., the Robertson clan’s duck-call business in Louisiana that’s profiled in the hit A&E reality TV show. The beverage maker, Chinook USA LLC, has argued in an lawsuit that the Robertson family broke a contract that called for them to promote Chinook’s ice tea drink inspired by Uncle Si, who drinks from a bottomless cup of ice tea on the show. As a result, sales haven’t been great for the beverage, which was unveiled last year at a Nascar race near Dallas. That contract violation should enable Chinook to avoid paying the appearance bill, along with a $500,000 request for royalties, according to documents filed in U.S. Bankruptcy Court in Louisville, Ky. Under the five-year contract, the beverage maker agreed to pay a minimum of $1 million to the Robertsons’ business every year.

Read More from: WSJ.com: Bankruptcy Beat

15 hours 48 min ago
Boomerang Systems, Inc. Et Al. Boomerang Systems, Inc. (BMER, OTCBB), a developer of automated parking systems, and three of its affiliates have filed chapter 11 petitions in Delaware. (Note: This filing does not appear to be related to Boomerang Tube). The docket and other information about the case is available through Garden City Group at http://www.gardencitygroup.com/cases-info/BMR/ The petition and first day declaration are attached here.
16 hours 31 min ago
By Stephen W. SatherBarron & Newburger, P.C.

Read More from: CLLA Bankruptcy Blog

17 hours 33 min ago
Debt comes with a silent partner – stress. Unless you’re careful, that stress can build to life threatening levels. We’re told from an early age that we need to get out into the world and make something of ourselves. The subtext is, “go out and make a lot of money so you can buy a big house and a nice car!” The message is reinforced by commercial messages encouraging us to buy a home, get a new car, and go on fancy vacations. As if that weren’t enough, our celebrity-obsessed culture encourages us to model our lives on Kim and Kanye, Beyonce and Jay Z, and the rest of the mega-wealthy jetsetters that flood our Facebook streams. But for most of us, the only way to pay for the car, the home and the vacation is to take on debt. This, on top of the debt we take on to go to college. That debt creates stress, which breaks us down physically and mentally. We don’t sleep as restfully. We eat too much or not enough. Our relationships suffer. We’re at a higher risk of major health issues, including death. The Debt-Stress Connection
17 hours 45 min ago
ItÂ's time for the mortgage industry to take a lesson from the presidential hopefuls who have gained an upper hand by playing up their individual brands.

Read More from: BankThink

18 hours 47 min ago
  Divorce usually requires the division of the debts of the marriage along with the assets. The legalese usually requires each party to indemnify and hold harmless the other from the debts assigned to that party. Most folks skim over that provision to worry about the division of assets or support issues or the termination of their status as married people. Indemnification is worth another look. Long after the personal property that was divided has worn out and the need for support has passed, the right to indemnification may live on. Given the length of some statutes of limitation and an industry selling and collecting on time barred debt, the obligation to indemnify your ex may live longer than the marriage. So, what’s indemnification all about? Indemnification creates a new debt First, let’s define indemnify.  It means to make someone whole should they suffer a particular kind of loss. In the case of a divorce, a right to indemnity would require one spouse to pay all the damages inflicted on the other by reason of a debt assigned to the other spouse.
18 hours 54 min ago
Receiving Wide Coverage ... Interest Rate Outlook: The Wall Street Journal suggests the Fed is likely to stick to the plan to raise rates before the end of the year, based on discussions at the Federal Reserve Bank of Kansas City's annual policy retreat in Jackson Hole, Wyo. Market volatility and economic troubles in China aside, the paper says, a majority of Fed officials think the U.S. is largely on track for a quarter-percentage point increase. Â...

Read More from: BankThink

19 hours 36 min ago
Construction of the Baha Mar resort on the beach in the Bahamas. Baha Mar’s bankruptcy judge likely will rule on a bankruptcy case dismissal next month. 
Baha Mar
Baha Mar Ltd.’s bankruptcy judge outlined two different middle grounds on dismissal of the resorts project’s bankruptcy, Daily Bankruptcy Review reports via The Wall Street Journal. (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.”) According to WSJ, Puerto Rico’s governor extended a draft restructuring plan deadline. A judge awarded Thornburg Mortgage Inc.’s liquidating trustee $45 million in a lawsuit against the Royal Bank of Canada, DBR reports via WSJ.

Read More from: WSJ.com: Bankruptcy Beat

21 hours 18 min ago
On August 26, 2015, Santa Fe Gold Corporation and three of its subsidiaries, filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware (the “Court”).  The case no. is 15-11761 and is pending before the Honorable Mary F. Walrath. The Debtors are continuing in possession of their properties and are managing their businesses, as debtors in possession, in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court. Santa Fe Gold is a U.S.-based mining and exploration enterprise.  Santa Fe controls: (i) the Summit mine and Lordsburg mill in southwestern New Mexico; (ii) a substantial land position near the Lordsburg mill, comprising the core of the Lordsburg Mining District; and (iii) a deposit of micaceous iron oxide (MIO) in Western Arizona. According to their petition, the Debtors have approximately $19 million in total assets, and $29.8 million in total debts. Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.
21 hours 52 min ago
USA Discounters Ltd. filed for bankruptcy protection in the Delaware Bankruptcy Court and plans to wind down its business.  The case is before the Honorable Christopher S. Sontchi, and is assigned case no. 15-11755-CSS. Prior to its bankruptcy filing, USA Discounters sold furniture, appliances, electronics, jewelry and other products from stores located near military bases, often financing such purchases through its own credit program. The company cited the tough retail climate, a defaulted loan and various governmental actions regarding its operations as factors for the chapter 11 filing. USA Discounters expects to use its time in chapter 11 to wind down its operations. It closed its twenty-four USA Living stores before filing for bankruptcy protection and is still considering its options for its seven Fletcher’s Jewelers stores. Founded in 1991 in Norfolk, Va., USA Discounters financed customers’ purchases of such items as televisions, washers, dryers and jewelry—products it said “might otherwise be out of reach” for its customers, many of whom were military members and their families and had “limited resources or tarnished credit profiles. USA Discounters has stated that it is owed an estimated $114 million on existing payment plans, its most significant asset.
22 hours 2 min ago
Like most bank defendants, Key Bank was looking for the quickest way out of a $5 million fraudulent transfer lawsuit brought by a chapter 7 Trustee.  Rather than wait to win in the standard path of arguing facts, the bank relied on the broad and powerful “safe harbor” provision of the bankruptcy code which protects certain transfers from recovery.  In doing so, the bank utilized a technical, but effective, argument to avoid the need for trial and simply exit the case where it entered. Intersteller Credit: Paramount Pictures I. The Underlying Loan The basic transactional history of the case will sound fairly familiar to many readers; however, that is why it will be equally important in light of the outcome.  A loan in the amount of $11.2 million was made to an insider of the bankrupt debtor prior to bankruptcy.  While the bankrupt debtor had no obligation to repay the loan, the debtor did, in fact, pay back approximately $5 million to the lender. Shortly after the note was signed and the loan was funded it was assigned to a REMIC as a CMBS governed by a Pooling and Servicing Agreement (“PSA”).  Key Bank’s servicing arm was the master servicer for another major bank as trustee (the “Trustee”) for the Loan.  II. The Lawsuit

Read More from: Tough Times for Lenders

1 day 5 hours ago
The Consumer Financial Protection Bureau (CFPB) released its monthly consumer complaints snapshot. The report spotlights credit reporting complaints. According to the report, the majority of the credit reporting complaints were about problems with incorrect information on the reports. As of August 1, 2015 the Bureau has handled over 677,000 complaints across all products. “Whether a consumer is trying to get a mortgage, apply for a student loan, or buy a car, credit reports are fundamentally important in allowing people to access their financial goals,” said CFPB Director Richard Cordray. “As we see a rise in the number of consumers complaining about this issue, the Bureau will continue to work to ensure that credit reports are fair, accurate, and readily available to all consumers.”
2 days 8 hours ago
  Sounds kinky, doesn’t it? Three players in a marriage. Sharing. Everything. Only this is something you can talk about openly, without blushing: community property. Community property is the default arrangement in California for a married couple. Yet it is poorly understood by those practicing it and it isn’t inevitable. How community property works The community property system provides that everything acquired during marriage is equally owned by the spouses, regardless of which spouse acquired it. The law provides that property owned before marriage or acquired by gift or inheritance is the separate property of the spouse who acquired it. The most vivid way to imagine the community property system is to see marriage as comprised (for financial issues) of three players:
  • husband,
  • wife, and
  • the community property.
Each of the three may have different exposure to debts. [ I speak here of the traditional composition of a marital couple, but remember that both same sex couples and registered domestic partners fall under the California community property system. ] The central concept is that only the person who contracts for a debt is personally liable.
2 days 18 hours ago
Next week in bankruptcy, Patriot Coal Corp. will kick off a series of hearings on Monday, including a request to sell off its remaining mines and a trial over its bid to reject the labor agreements governing its union members. Patriot has asked Judge Keith Phillips of the U.S. Bankruptcy Court in Richmond, Va., for permission to terminate a union contract that includes pension contributions and health benefits for its union miner retirees. The company has blamed the continued strain of pension and other obligations owed to its miners as well as troubles in the coal industry for its bankruptcy. Patriot sought chapter 11 protection in May, less than two years after emerging from its prior court restructuring. The union, United Mine Workers of America, is negotiating with the company as well as with the proposed buyers, but union lawyers say Patriot is intent on walking away from its environmental cleanup costs and its obligations to workers after handing over valuable assets to top-ranking creditors. The looming battle prompted hundreds of union miners and retirees to protest outside Patriot’s headquarters last week.

Read More from: WSJ.com: Bankruptcy Beat

3 days 16 hours ago
Bloomberg
Cash-starved oil-and-gas companies are getting a lot of mileage out of their assets these days. A severe slump in commodity prices has sent energy explorers and producers scrambling to shore up their balance sheets, leading to a flurry of debt sales this year by the industry’s most financially strained firms. The new bonds typically promise creditors ownership of the company’s assets, should it default. But in many cases, that claim sits behind the liens of one or even two higher-priority slices of debt. Halcon Resources Corp. highlighted the trend late Thursday, exchanging $1.57 billion in unsecured bonds for $1.02 billion in new “third-lien” debt, backed by a claim on the company’s assets that sits behind those of its credit line and $700 million in bonds the company sold in May. Halcon followed Midstates Petroleum Co., a Tusla oil-and-gas company that in May issued $504 million in bonds with a third-priority claim on the company. Midstates sold the bonds as part of a broader financing that also swapped unsecured bonds for second-lien debt.

Read More from: WSJ.com: Bankruptcy Beat

3 days 16 hours ago

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