The U.S. Court of Appeals for the Second Circuit issued an opinion on Jan. 21, 2015, holding that a UCC-3 termination statement was effective to extinguish a security interest of up to as much as $1.5 billion, notwithstanding that the secured lender erroneously authorized the filing of the termination statement and did not intend to extinguish the security interest.
Privacy issues are not new to corporate reorganizations; §§ 322 and 363(b)(1) were enacted as part of BAPCPA precisely to address such concerns. In an increasingly digital age, reorganizing debtors may possess a slew of personally identifiable information (PII), itself a term defined at § 101(41A).
One of the fundamental rights afforded to a debtor is the right to reject burdensome contracts and unexpired leases. However, where the debtor is the lessor of real property or the assignor of intellectual property, rejection of the underlying agreement could be catastrophic to the nondebtor counterparty.
Every dollar counts, and for debtors that are party to tax-sharing agreements (“TSAs”), significant dollars may be at stake. As the Sixth and Ninth Circuit Courts of Appeals have demonstrated, when dealing with tax refunds and TSAs, it is not always clear that a debtor’s estate is entitled to every dollar.
This two-part article discusses how the United Kingdom and the United States have become the two main jurisdictions where debtors outside of such jurisdictions (foreign debtors) have been able to successfully restructure their businesses.
Bankruptcy Code § 365(n) provides significant protections to licensees under intellectual property licenses that are rejected by debtor-licensors. Section 365(n) permits a licensee to retain its rights in licensed intellectual property post-rejection in exchange for the continued payment of royalties.
In the latest installment of the Lehman Brothers subordination litigation, the U.S. Bankruptcy Court for the Southern District of New York held that certain creditors’ claims were not claims for damages arising from “securities of the debtor,” and did not have to be subordinated to claims of creditors, notwithstanding that the debtor was treated as an issuer, for regulatory purposes, as an issuer of the mortgage-backed securities.
The secondary bankruptcy claims market has become big business over the past several years, resulting in a proliferation of court rulings that underscore risks and “regulation” around claims-trading, especially when claims are purchased for strategic objectives and not anticipated cash recovery.
Over the years, claims-trading has become the norm in bankruptcy cases. Claims are bought and sold for various reasons, including to liquidate a position, profit from an increase in the claim’s value and/or leverage a claim into the ownership of the debtor.
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