Business Law Insolvency Law Committee

Summary: The Fifth Circuit has held that when a transferee is on inquiry notice of fraudulent behavior on the part of the transferor, the “good faith” defense under the UFTA is destroyed, even if an inquiry by the transferee would have been futile since the transferor’s scheme was so complex. [Janvey vs. GMAG, LLC, 2019 Westlaw 141107 (5th Cir.).] Read more

The Second Circuit has held that an arbitration clause contained in a consumer contract was unenforceable because the provision was so obscure that it never became part of the contract at all. [Starke v. SquareTrade, Inc., 2019 Westlaw 149628 (2nd. Cir.).] Read more

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