BCLP Global Restructuring & Insolvency Developments

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Bankruptcy Trustees Receive Early Holiday Present – a Circuit Level Win Against Colleges in the Tuition Clawback Cases

 

We here at the Global Restructuring & Insolvency Developments (GRID to our friends) have been following the tuition clawback wars for a few years – the cases in which a bankruptcy trustee sues a college to return tuition that the bankrupt parent paid for  their child when the parent was otherwise stiffing other creditors.  It is a textbook constructively fraudulent transfer because the parent(s) do not receive reasonably equivalent value (or anything, for that matter) for the payment of the kid’s tuition.  Our prior coverage is here and here.  (And for those of you who want to really geek out on this, here’s a video of an entire symposium panel on the topic, from our friends at the Emory Bankruptcy Developments Journal.)

Anywho, yesterday the First Circuit decided the long-awaited appeal in DeGiacomo v.

Five Tips for Avoiding a Catastrophic Loss From a Customer’s Bankruptcy

Editor’s note:  Our New York partner Stephanie Wickouski originally posted this fundamental yet insightful list of reminders for suppliers, wholesalers, and other vendors which continue to deal with retail distress on BCLP’s Retail Law Blog, one of the leading cross-disciplinary blogs on all legal issues affecting the retail and consumer products world.   If you live in retail, subscribe over there, too – you won’t regret it!

 

One day, you get a notice in the mail that an important customer has filed chapter 11. Your customer recently paid $250,000 on invoices that were delinquent for several months and still owes you $500,000. The customer, a brick-and-mortar store, sent form letters to its vendors expressing optimism that the chapter 11 process will allow the store to continue to operate while it locates a buyer which will continue to operate the store.

A few weeks

SCOTUS Clarifies What Happens When a Trademark Licensor Files Bankruptcy

Trademark licensors and licensees, as well as their stakeholders (including lenders), should heed the U.S. Supreme Court’s decision in Mission Product Holdings, Inc. v. Tempnology, LLC n/k/a Old Cold, LLC, No. 17-1657.  The Justices resolved a long-standing question arising from the intersection of bankruptcy and trademark law: whether a debtor/licensor’s rejection of a trademark license terminates the licensee’s right to use a trademark after rejection.  In an 8-1 decision, the Justices answered: “no,” rejection simply creates a breach, but not rescission.  If the license or applicable law grant continuing rights to the licensee upon a breach by the licensor, rejection under the Bankruptcy Code does not alter or terminate such continuing rights.

Section 365(a) of the Bankruptcy Code (11 U.S.C. § 365) is the starting point of the analysis (but critically, not the ending point as discussed below).  Section 365(a) permits debtors in bankruptcy to “assume

As Safe as Houses? Insolvency in the UK Hotels Sector

May 20, 2019

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Eva Holden, a senior associate in BCLP’s London Restructuring & Insolvency practice group and a member of BCLP’s Hospitality and Leisure  sector group, authorized this article on dealing with enforcement remedies against hotel operators in the April 2019 issue of Corporate Rescue & Insolvency.  A link to the article is here.

U.S. Trustee Fees – one spreadsheet to rule them all…

Editor’s Note – This is a great and useful post.  Most importantly, these formulae work perfectly – your editor actually tried them out in his own spreadsheet.  For your next Debtor case, use this for your budgeting and there should be no surprises for US Trustee fees.  And if you have any trouble with this, call Jacob directly – he is a data-driven lawyer and also very interested in lending a hand to fellow restructuring professionals.

Recently I had to project quarterly U.S. Trustee fees in several jointly administered chapter 11 bankruptcy cases under the U.S. Trustee’s current fee guidelines (posted to effectuate 28 U.S.C. § 1930(a)(6)).  Fees are calculated based on each debtor’s “disbursements” in a given quarter.[1]  The calculation of multiple U.S. Trustee fees for multiple debtors can be challenging, particularly since the U.S. Trustee fees are calculated based on eight different brackets. 

SCOTUS Protects Lawyers Pursuing Non-Judicial Foreclosure As Not the Actions of a “Debt Collector” under the FDCPA

Editor’s Note:  BCLP’s consumer financial services team is a group of specialized lawyers from around the U.S., adept in state court rumbles, courthouse steps foreclosures, and bankruptcy court interludes.  They are also deep thinkers in consumer law, and were waiting for this ruling today.  If you have a portfolio of consumer loans and want some efficient, value-maximizing handling, give us a call.  Here’s the take from Zina Gabsi, from our Miami CFS practice.  

 

Earlier today, the U.S. Supreme Court issued its long-awaited opinion on whether law firms pursing non-judicial foreclosures are “debt collectors” as defined by the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1692 et seq.[1]  In its Obdusky ruling, The Court held that a business engaged in no more than a non-judicial foreclosure is not a debt collector under the FDCPA. (Business lawyers around the US breathed a collective sigh of relief.) 

A step forward – the FirstEnergy Solutions court comes to the commonsense conclusion that steel forges aren’t “forward contract merchants.”

Thomas Paine would be proud of this Court’s commonsense approach to the Bankruptcy Code

 

In the In re FirstEnergy Solutions Corporation bankruptcy cases,[1] the court recently issued an opinion narrowing the number of situations in which a fixed-price supply agreement (used to hedge against rising input costs and constituting a “forward contract” in bankruptcy parlance) will be treated as an exception to the general rules governing “executory contracts”[2] in chapter 11 bankruptcy cases.

The “automatic stay” under section 362 of the Bankruptcy Code usually prevents a contract counterparty from terminating an executory contract without first getting court approval (i.e., relief from the automatic stay); this is true even if the contract provides it may be terminated upon the filing of

How to Lose a Receiver in One Appeal

February 6, 2019

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How to Lose a Receiver in One Appeal

February 6, 2019

Authored by: Keith Aurzada

The appointment of a receivership is an incredibly useful tool for lawyers. Since it is such a useful tool and due to a recent ruling in Texas, we thought now was as good as any to brush up on our familiarity with receiverships.  (And by the way, check out a prior post by my colleague Brad Purcell on “Fourteen Ways to Appoint a Receiver in the Lone Star State.”)  Although this post focuses on Texas law, the statutes governing most states and federal receiverships have similar requirements.

The general receivership statute in Texas allows for the appointment of a receiver under a number of conditions including[1] an action by a creditor to subject any property or fund to his claim if the creditor has a probable interest in or right to the property or fund and the property is in danger of

In a Case of First Impression, the Ninth Circuit Begins to Unravel the Mystery of When a Claim to Enforce a Rescission Request under TILA May be Time-Barred

Editor’s Note:  Our good colleagues at BankBCLP are always at the forefront of matters of concern to the banking and financial services community; this blog post first appeared on BankBCLP.  Consumer financial services remains a morass of challenging rulings and regulations.  Jim Goldberg from BCLP’s San Francisco office provides some guidance on a recent TILA decision on the right of rescission.

An action by a Washington state borrower to enforce a request for rescission of a loan under the Truth in Lending Act (TILA) is analogous to an action to enforce a contract and must be brought within the Washington state statute of limitations for such a contract claim, given that TILA itself does not provide a limitations period.  Hoang v. Bank of America, N.A., 2018 WL 6367268 (9th Cir. December 6, 2018).

To effect rescission of a loan under TILA,

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