When a bank fails and is liquidated by the Federal Deposit Insurance Corporation (FDIC), and then the bank’s holding company files for bankruptcy, a dispute frequently arises regarding ownership of tax refunds issued to a consolidated group (including the bank and the bank holding company) pursuant to consolidated tax returns.
In line with one of bankruptcy’s vaunted goals, providing debtors with a fresh start, the Bankruptcy Code specifically authorizes debtors to exempt retirement funds held in a compliant retirement account from property of the estate. When done properly, investing funds in a compliant profit-sharing plan can be a powerful financial-planning and asset-protection tool, putting almost unlimited funds out of creditors’ reach.
Editor’s Note: On May 30, ABI hosted the Student Debt Symposium at Georgetown University Law Center in Washington. The day-long interdisciplinary conference brought together educators, policymakers and practitioners for a series of panels about the causes and consequences of the $1.2 trillion student debt bubble.
Editor’s Note: For more information about the proposed Chapter 14 plan, register for ABI’s July 15th webinar titled “Proposed Chapter 14 and the Future of Large Financial Institution Resolution.” This webinar is being hosted by the Legislation Committee: http://goo.gl/bjid0z.
In November 2013, the Third Circuit decided In re KB Toys Inc.,[1] which has created a split of authority between Delaware and New York concerning the defenses of claims traders to preference liability. KB Toys may chill claims trading within that Circuit, while existing favorable treatment remains within the Southern District of New York.
The Fifth Circuit’s ruling on Nov. 11, 2013, in BP RE L.P. vs. RML Waxahachie Dodge L.L.C. et al..[1] extended what it had previously acknowledged was a “narrow ruling” by the U.S. Supreme Court in Stern vs. Marshall.[2] The panel essentially held that the authority granted to the bankruptcy court to enter final orders and judgments under 28 U.S.C. §157(c)(2) is unconstitutional, despite express consent.
In order to confirm a chapter 11 reorganization plan, a debtor must satisfy all of the provisions of § 1129(a) of the Bankruptcy Code, except for § 1129(a)(8), which requires that each class of creditors either (1) accept the proposed plan or (2) is unimpaired under the proposed plan. When a debtor fails to meet § 1129(a)(8), the debtor can “cram down” a dissenting unimpaired secured creditor pursuant to § 1129(b), but only if the plan is “fair and equitable” with respect to that creditor.
In a bankruptcy context, issues arising from the forced transfer of partnership or membership interests in a closely held business are a frequently encountered by the practitioner. The relevant focus is upon the value, or lack of value, given in consideration for the transfer of interest.
The unfortunate aftermath of a Ponzi scheme is that it leaves investors fighting amongst themselves over what remains and the competing interests of the “net losers” (those who lost money beyond the initial investment) trying to recover some of their losses and the “net winners” (those who made a profit) trying to hold onto distributions they received.
In Labourers’ Pension Fund of Central and Eastern Canada v. Sino-Forest Corporation[1], the Ontario court[2] approved Ernst & Young LLP’s (“Ernst & Young”) $117 million settlement relating to class action lawsuits commenced by jilted investors following the downfall of Sino-Forest Corporation (“SFC”), once the most valuable forestry company on the Toronto Stock Exchange. The $9.2 Billion class action (which is ongoing against certain defendants) contains significant allegations of fraud that call into question SFC's reported asset values and revenues, as well as the practices of SFC's auditors, underwriters and consultants.
