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The phrase ipso facto is Latin for “by the fact itself.”  Ipso facto clauses are sometimes included in lease and purchase contracts, and they assert that if the lessee or purchaser becomes insolvent, or files for bankruptcy protection, then the contract has been breached.  In other words, under such a clause the very act of filing for bankruptcy protection constitutes a breach of contract that absolves the other party of any further contract obligations.

Such clauses are not valid in bankruptcy; lessors and sellers that may become creditors in a bankruptcy down the line should proceed with caution.

I. Federal Preemption

The Bankruptcy Code was made pursuant to Congress’ Constitutional power under Article I, § 8, which provides, in pertinent part:

The Congress shall have power to establish uniform laws on the subject of bankruptcies throughout the United States.

In this regard, Article VI of the Constitution provides:

This Constitution, and the laws of the United States which shall be made in pursuance thereof shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any state to the contrary notwithstanding.

Read More from: Insolvency Insights

1 week 5 hours ago

CariClub crunches employee data to connect young banking professionals with nonprofits on the hunt for junior directors.

Read More from: BankThink

1 week 5 hours ago

Arguments that the central bank should develop its own system for faster payments ignore current market realities, says The Clearing House, which has developed its own network.

Read More from: BankThink

1 week 5 hours ago

On March 27, 2019, Justice Breyer, writing for a six-Justice majority of the Supreme Court, issued a decision in Lorenzo v. SEC, 139 S. Ct. 1094 (2019), holding that one who knowingly distributes a material misstatement can be held liable under Rule 10b-5(a) and (c).  The decision is noteworthy for its arguable tension with Janus … Continue reading

The post SCOTUS Opens Door to Potential Expansion of Rule 10b-5 Liability for Misstatements appeared first on Robins Kaplan Trial Attorneys Blog.

1 week 6 hours ago

The Pittsburgh company more than doubled its provision for loan losses during the first quarter to keep pace with growth in its loan portfolio.

Read More from: BankThink

1 week 6 hours ago

In the MeToo era, financial firms the world over are struggling to handle complaints of sexual harassment. A case in point: HSBC.

Read More from: BankThink

1 week 7 hours ago

Wells Fargo & Co. investors who stuck with the bank through a bumpy few months are being rewarded with the best first quarter in five years.

Read More from: BankThink

1 week 7 hours ago

Bank's profits grow 5% on earnings growth; Citi's number 2 exec retirement shows the difficulty retaining a host of top executives.

Read More from: BankThink

1 week 7 hours ago

The Fed may have stopped raising borrowing costs for now, but the biggest U.S. bank is still reaping benefits from higher interest rates.

Read More from: BankThink

1 week 8 hours ago

DividendsFollowing our 2016 article, the Court of Appeal has upheld the decision of the High Court that dividends are liable to challenge as transactions defrauding creditors under section 423 of the Insolvency Act 1986 (the “IA”).

Read More from: eSQUIRE Global Crossings

1 week 9 hours ago

Readers respond to this week's big-bank CEO hearing before the House, weigh the debate over Community Reinvestment Act reform, consider whether Wells Fargo needs a new brand and more.

Read More from: BankThink

1 week 18 hours ago

In a roundtable discussion, the heads of four banks called on Congress to move on CRA modernization and address the cannabis conundrum, while dismissing arguments that midsize banks need to merge to stay competitive.

Read More from: BankThink

1 week 18 hours ago

President Trump’s Executive Order yesterday on energy infrastructure and economic growth contained an unexpected Section 5 entitled “Environment, Social and Governance Issues; Proxy Firms and Financing Energy Projects Through the United States Capital Markets.”  While the section does not directly address environmental, social and governance (ESG) disclosure, it restates the definition of materiality from the U.S. Supreme Court case, TSC Industries, Inc. v. Northway, Inc., and reiterates a company’s fiduciary duties to its shareholders to strive to maximize shareholder return, consistent with the long-term growth of the company.  This order comes on the heels of last week’s U.S. Senate Committee on Banking, Housing, and Urban Affairs hearing on ESG Principles in Investing and the Role of Asset Managers, Proxy Advisors and Other Intermediaries, as well as ongoing activity at the U.S.
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1 week 21 hours ago

Organizers of the Bank of St. George have filed an application with the FDIC and state regulators and plan a public stock offering.

Read More from: BankThink

1 week 22 hours ago

More consumers were late in paying two major types of loans in the latest figures from the American Bankers Association, but it appears to be a relatively isolated problem.

Read More from: BankThink

1 week 23 hours ago

IRA contribution

 

Tax day approaches. Only a few days remain to make an important decision.

You expect to live for decades after you’re eligible for Social Security, don’t you?

Then, you have only until April 15th to use the 2018 allowance for contributions to a tax-advantaged IRA.

Miss making that 2018 contribution and it’s gone for all time.

So, you miss out on that contribution growing, tax free, until you withdraw it.  You miss the miracle of tax-free compound-interest.

Do you really want to miss this opportunity?

Contributions have annual limits

For reasons that I’m sure made (some) sense at the time, Congress capped how much you can contribute to your IRA each year.

Read More from: The Soap Box

1 week 23 hours ago

The Trump administration directed independent agencies to submit their pending guidance for review by the Office of Information and Regulatory Affairs, a novel procedural hurdle that could slow down policy changes.

Read More from: BankThink

1 week 1 day ago

New York's former banking superintendent will spend much of the next three months advising fintech startups on how to cope with regulators.

Read More from: BankThink

1 week 1 day ago

Cryptocurrency exchange Bittrex is protesting New York's decision this week to deny it a virtual license exchange, claiming that its rationale contains factual errors and its personnel were not well versed in blockchain.

Read More from: BankThink

1 week 1 day ago

A fourth Senate Republican said he'd vote against businessman Herman Cain joining the Federal Reserve Board, all but sinking any chances that he'd get through the confirmation process if Democrats stay united in their opposition.

Read More from: BankThink

1 week 1 day ago

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