Business Law Insolvency Law Committee

A bankruptcy court in Illinois has held that a "silent second" clause contained in a subordination agreement barred a junior creditor from conducting discovery in aid of a bankruptcy trustee's objection to a senior creditor's claim against the debtor. [In re Argon Credit, LLC, 2019 Westlaw 169315 (Bankr. N.D. Ill.).] Read more

Summary: A California appellate court has held that a holdover tenant cannot invoke a right of first refusal that was contained in an expired commercial lease. [Smyth vs. Berman, 2019 Westlaw 156761 (Cal.App.).] Read more

An asset purchaser has obtained $10 million in compensatory civil contempt damages from a prepetition creditor due to the creditor's assertion of successor liability claims, in violation of the injunctions and releases contained in a Chapter 11 plan of reorganization. [In re Kimball Hill, Inc., 2019 Westlaw 93311 (Bankr. N.D. Ill.).] Read more

A bankruptcy court in South Carolina has held that a trustee may invoke the power of the IRS to avoid the debtors' disclaimer of settlement proceeds, even though other unsecured creditors could not have done so under applicable state law. [In re Gaither, 2018 Westlaw 6287971 (Bankr. D. S.C.).] Read more

The Supreme Judicial Court of Maine has held that an unauthorized modification of a commercial lease was extinguished when the holder of the senior mortgage foreclosed on the landlord’s interest in the property. [Littlebrook Airpark Condominium Association vs. Sweet Peas, LLC, 2019 Westlaw 123599 (Maine).] Read more

The following is a profile of the Honorable Scott C. Clarkson – the tenth in a series of profiles of Ninth Circuit bankruptcy judges. Judge Clarkson and members of the Insolvency Law Committee and Business Law Section Executive Committee met and discussed his personal and professional background, observations from the bench, and issues of interest. Read more

A bankruptcy court in Delaware has held that the "waterfall" provisions contained in an intercreditor agreement barred all distributions to a group of junior lienholders in a Chapter 11 case until the senior lender had been paid in full. [In re La Paloma Generating Co., 2018 Westlaw 6022271 (Bankr. D. Del.).] Read more

A bankruptcy court in New York has held that a note and mortgage were unenforceable because the alleged assignee failed to show that it was the holder of the note, despite an endorsement in blank, a corporate assignment, and physical possession of the note. [In re Pinnock, 2018 Westlaw 5794442 (Bankr. S.D.N.Y.).] Read more

The Sixth Circuit has held that even though the statute of limitations applicable to a mortgage reseller's repurchase claim against the seller had run, the reseller's claim for indemnification was not time-barred. [Franklin American Mortgage Co. vs. University National Bank of Lawrence, 2018 Westlaw 6377719 (6th Cir.).] Read more

A bankruptcy court in Ohio, applying Alabama law, has held that a trustee could not qualify as a hypothetical bona fide purchaser of a bankrupt's real property because a recorded power of attorney did not expressly authorize the daughter to convey her mother's real property to herself. [In re Shelton, 2018 Westlaw 5098814 (Bankr. N.D. Ohio).] Read more