Business Law Insolvency Law Committee

Summary: A bankruptcy court in Florida has held that a trustee asserting an "unreasonably small assets" fraudulent transfer claim must show that the transfer in question was the event that caused the debtor to have unreasonably small assets; if the debtor was already in distress, then the transfer was not the cause of the debtor's financial demise. [In re Palm Beach Finance Partners, LP, 2019 Westlaw 1301899 (Bankr. S.D. Fla.).] Read more

Summary: A bankruptcy court in Virginia has held that two adjacent retail parcels did not constitute a "shopping center" despite their common ownership; thus, a bankrupt tenant could assign its lease to a neighboring tenant's competitor, in violation of the existing tenant’s exclusivity clause. [In re Toys "R" Us Property Co. I, LLC, 2019 Westlaw 1075434 (Bankr. E.D. Va.).] Read more

Summary: An individual borrower obtained a $3 million punitive damage award, on top of almost $600,000 in total compensatory damages, against a loan servicer that falsely declared that her mortgage was delinquent. In calculating the permissible ratio of punitive damages, the court aggregated all of the borrower's cumulative damage awards, rather than looking solely to her tort claim. [Saccameno vs. Ocwen Loan Servicing, LLC, 2019 Westlaw 1098930 (N.D. Ill.).] Read more

Summary: The Wyoming Supreme Court has held that the members of an insolvent LLC do not owe fiduciary duties to its creditors, unlike the principals of an insolvent corporation. [Mantle vs. North Star Energy & Construction LLC, 437 P.3d 758 (Wyo. 2019).] Read more

Summary: A bankruptcy court in New York has held that a group of term lenders who received payment under a debtor-in-possession order could not invoke an earmarking defense to the estate's avoidance claims because the order itself authorized the estate to prosecute those claims. [In re Motors Liquidation Co., 2019 Westlaw 367170 (Bankr. S.D.N.Y.).] Read more

Summary: The Pennsylvania Supreme Court has held that a mortgage assignee's litigation manager was able to authenticate the business records created by the original lender, depending on the circumstances. [Bayview Loan Servicing LLC vs. Wicker, 2019 Westlaw 1388516 (Pa.).] Read more

Summary: The Seventh Circuit has held that under Wisconsin law, where a "limited remedies" provision would have deprived the non-breaching party of all of its remedies against the breaching party, the clause is per se unconscionable and is unenforceable. [Sanchelima International, Inc., vs. Walker Stainless Equipment Co., LLC, 2019 Westlaw 1552681 (7th Cir.).] Read more

Summary: The Fifth Circuit has held that two agricultural purchase money security interests were unperfected because the secured creditors' financing statements listed both the debtor's correct name and its DBA, thus making it impossible for the Secretary of State's standard search logic to pick up the filings. Further, the contractual choice of law clauses contained in the parties' invoices did not control the issue of lien perfection. [Fishback Nursery, Inc., vs. PNC Bank, N.A., 2019 Westlaw 1548823 (5th Cir.).] Read more

Summary: A California appellate court has held that a fraudulent transfer claim attacking a collusive stipulated judgment between a judgment debtor and his brother is not subject to the litigation privilege. [Chen vs. Berenjian, 2019 Westlaw 1397592 (Cal.App.).] Read more

Summary: A district court in California has held that a state statute invalidating contractual penalty provisions was inapplicable to a default interest rate clause contained in loan documents. [East West Bank vs. Altadena Lincoln Crossing, LLC, 2019 Westlaw 1057044 (C.D. Cal.).] Read more