[1]On June 17, 2014, the U.S. Bankruptcy Court for the Northern District of Illinois addressed the defense to fraudulent transfer liability under § 548(c) of the Bankruptcy Code.[2] Section 548(c) provides a defense for otherwise fraudulent transfers if the transferee accepts the transfer in good faith, and provides value in exchange for such transfer.[3] Thus, there are two prongs to this defense: good faith and value.[4]
With an increasing number of bankruptcy cases centering on massive financial frauds, bankruptcy courts in recent years have drastically extended the definition and scope of “property of the estate.” Not surprisingly, this broader definition has also led to an increased application of the automatic stay, sometimes extending the stay to third-party actions that were not even brought against debtors.[1]
General Motors (GM) is currently facing two main types of lawsuits linked to its recall of cars with defective ignition switches. For those injured or killed as a result of these switches, GM has set up a special fund to compensate victims and their families.[1] Yet, the very contentious and much more expensive issue concerns car owners suing GM for economic losses related to the defects,[2] and these claims could easily reach into the billions of dollars.[3]
The Bankruptcy Code defines “claim” as a “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured….”[1] Congress intended the “broadest possible” definition, and that the Code “contemplates
Over the last decade or so, the vast majority of chapter 11 cases not converted to chapter 7 have resulted in sales of the debtors' assets. The sales were accomplished either under § 363 of the Bankruptcy Code or pursuant to a liquidating chapter 11 plan.
In a recent decision arising out of the Lehman case, which has been characterized as the largest and most complex bankruptcy in history and saw professional fees and expenses exceed $1.8 billion, the U.S.
In seeking to protect rights in collateral during the course of a bankruptcy case, secured creditors should be aware of potential fraudulent transfer liability and its far-reaching effect on the ability to protect collateral.
In his 2009 State of the Union Address, President Barack Obama urged Congress to confront the “crushing cost of health care,” claiming that “[t]his is a cost that now causes a bankruptcy in America every thirty seconds.”[1] Like-minded lawmakers subsequently introduced legislation to provide certain bankruptcy protections for medically
Recently, the U.S. Bankruptcy Court for the District of Delaware had the opportunity to further clarify the power of § 363 sale processes to cleanse assets and the fragile nature of pension claims in bankruptcy. The court considered and rejected an objection to a § 363 sale free and clear of any successor liability claim where the sale was supported by the debtors, the lenders and the unsecured creditors’ committee, but not the pension trust.
In real estate bankruptcy proceedings, the determination of a post-bankruptcy interest rate is often a critical element of the repayment or restructuring plan. The appropriate rate is typically not one that can be observed or obtained in the regular markets — the debtor in possession is already in bankruptcy and consequently, a commercial loan is very likely unfeasible. The U.S.
