In KBA Canada, Inc v Supreme Graphics Limited (2014 BCCA 117), the British Columbia Court of Appeal (the “BCCA”) prevented equitable considerations from overriding the statutory ranking of security interests in the Personal Property Security Act (British Columbia) (the “PPSA”). The plaintiff, KBA Canada, Inc. (“KBA”), had registered a security interest in an offset printing […]
2014
The Apcoa Parking Restructuring: The jurisdiction of the English court over schemes of arrangement of foreign companies
Executive Summary One of the key financial restructuring cases in the UK market during 2014 was the restructuring of the Apcoa Group (the “Group”). In Apcoa Parking Holdings GmbH & Ors (“Apcoa 1”),[1] the English court sanctioned inter-conditional schemes of arrangement of nine Group companies (the “Scheme Companies”) pursuant to Part 26 of the Companies […]
Privy Council finds that courts’ power to assist foreign courts is limited to the power of the foreign court
Singularis Holdings Limited v PWC [2014] UKPC 36 Background and facts In closely related proceedings, the liquidators of two Cayman-incorporated companies, Saad Investments Company Limited and Singularis, sought to obtain documents belonging to those companies’ auditors, PWC, in Bermuda. In both instances, the Privy Council’s decision frustrated those attempts. The decisions demonstrate the difficulties in […]
Privy Council finds assets of a company (wherever located) being wound up subject to a trust in favor of all creditors
Background and facts A recent Privy Council case, which itself referenced the Singularis decision referred to elsewhere in this article, again had reason to examine the interplay between different jurisdictions in insolvency situations. In Stichting Shell Pensioenfonds v Krys v Ors (BVI) [2014] UKPC 41, the court considered the extent to which a BVI court […]
Payment to a creditor on the eve of bankruptcy to further a commercial imperative not void against the trustee in bankruptcy (Alberta)
In Orion Industries Ltd. (Trustee of) v Neil’s General Contracting Ltd. (2013 ABCA 330), the Alberta Court of Appeal (the “ABCA”) gave guidance on when a payment to a creditor on the eve of the debtor’s bankruptcy will be void against the debtor’s trustee in bankruptcy under the Bankruptcy and Insolvency Act (Canada) (the “BIA”). […]
Duty of good-faith contractual performance recognized as an organizing principle of common law in Canada
In Bhasin v Hrynew (2014 SCC 71), the Supreme Court of Canada (the “SCC”) recognized a general duty of honesty in contractual performance which cannot be excluded by an entire agreement clause. Harish Bhasin (“Bhasin”) marketed education savings plans for Canadian American Financial Corp. (“Can-Am”). The agreement governing the relation between Can-Am and Bhasin (the […]
ACIC 2014 Annual Fall Meeting Summary Newsletter
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Bitcoins are “money”
In a September 18, 2014 order and decision in Securities and Exchange Commission v. Shaver et al., No. 4:13 CV 416 (E.D. Tx. 2014), the United States District Court for the Eastern District of Texas held that bitcoin is “money” and that a scheme involving bitcoin investment can be considered to be an investment contract […]
Recharacterization of Overriding Royalty Interests in Bankruptcy
Early in 2014, the Bankruptcy Court for the Southern District of Texas held that interests that facially meet the requirements for overriding royalty interests (and therefore have a particular preferred status under the Bankruptcy Code) can be recharacterized as financings, and therefore outside the scope of that protection. NGP Capital Resources Company vs. ATP Oil […]
Mortgage Anti-Deficiency protection can be waived
Although Texas has a statute (Tex Prop. Code §§ 51.003-51.005) that protects against deficiency liability in certain circumstances, it also provides that the protections of the statute can be waived by non-individual (non-consumer) borrowers. Grace Interest LLC v. Wallis State Bank, 431 S.W.3d 110 (Tex. App.-Houston [14th Dist.] 2013) confirms that such a waiver can […]
MERS Registration system does not contravene mortgage filing system law in Texas
In a notable case by a county recording office against MERSCORP (the entity that maintains a system of records of assignments of mortgages), the court’s decision in March 2014 put to rest the last claim of the county and permitted the MERS system to operate as currently configured. Dallas County et al. v. Merscorp, Inc. […]
Minority Shareholder Oppression: Apparent changes in the Texas rules
For several decades, the leading case in Texas in the area of oppression of minority shareholders in a corporation was Davis v. Sheerin, 754 S.W. 2d. 375 (Tex. App.– Houston [1st Div.] 1988), which to some has become a seminal case in the area. In June of 2014, the Texas Supreme Court considered the general […]
The Supreme Court of Louisiana, resolving a lower court split, holds that a forum selection clause is not a per se violation of public policy under Louisiana law; course of conduct established that a party’s unilateral terms and conditions containing …
An insurance company retained a consultant to provide services in connection with the defense of an insurance claim. The insurance company had previously retained the consultant on multiple occasions. Each time the consultant accepted a job, including in the case at bar, it routinely confirmed the engagement by letter to which it attached standard “Terms […]
Inconsistent forum selection clauses in asset purchase agreement and ancillary agreements must be read together; where some agreements had permissive forum selection and others had exclusive selection, all clauses were deemed permissive. Smith v. B2K Sys
A buyer and seller entered into an asset purchase agreement providing for the purchase of the seller’s assets. The asset purchase agreement referenced various “related agreements” that were executed as part of the purchase, including: (i) a promissory note executed by the buyer in favor of the seller’s president and sole shareholder; (ii) a guarantee […]
Court clarifies Florida standards for distinguishing between direct and derivative investor claims; in the absence of authorizing language in an LLC operating agreement, an LLC member could not sue another member directly for breach of the operating agree
When a real estate development limited liability company owned by three members began struggling to meet its mortgage loan obligations, its lender agreed to modify the loan on the condition that each of the three members make additional contributions to the LLC. Only two of the members complied. Because the two funding members refused to […]
Lender liability: investors in corporate borrower could not sue lender for negligence, negligent misrepresentation or fraudulent misrepresentation; under South Carolina law, a bank owes a limited duty of care to its customer, but bank owed no duty to
Investors, directors, officers and shareholders of a corporate borrower sued a bank lender alleging that the bank had made misrepresentations to them in their capacity as potential investors. The plaintiffs alleged that the bank had said in a meeting with potential investors that it was “fully committed to providing all of [the borrower]’s short-term and […]
Mortgagee’s failure to obtain judicial confirmation of real estate foreclosure sale barred claim for deficiency after second foreclosure sale of different real estate securing a different mortgage, where mortgages were cross-defaulted and cross-collateral
Three individual borrowers entered into two renewal mortgage notes with a bank, secured by real estate. On the same date, a related LLC as borrower entered into a renewal mortgage note with the bank on a separate loan secured by separate real estate. The three individuals also signed guarantees of all three notes. Each of […]
filing for bankruptcy is deemed to be a “prepetition wavier” of bankruptcy protection, and thus void as a matter of public policy
In In re Bay Club Partners, 2014 WL 1796688, 59 Bankr.Ct.Dec. 127 (Bankr. D. Or. 2014), the Bankruptcy Court for the District of Oregon held that the debtor, an Oregon limited liability company (“LLC”), had the authority to file for bankruptcy even though the LLC’s Operating Agreement specifically prohibited such a filing at that time. […]
Personal jurisdiction over an out-of-state defendant law firm who issued an opinion letter cannot be sustained where it is only shown that (1) the plaintiff has a strong connection to its home state, (2) the opinion letter written by the defendant was add
In Rockwood Select Asset Fund XI v. Devine, 750 F.3d 1178 (10th Cir. 2014), the Tenth Circuit held that a New Hampshire law firm’s opinion letter issued to its client’s lender in Utah did not subject the law firm to personal jurisdiction in Utah. Rockwood Select Asset Fund XI (6)-1, LLC (“Rockwood”) was a lender […]
The classification of an arbitration award under the UCC in a bankruptcy case is determined by the nature of the underlying claim held by the debtor
In Millennium Bank v. UPS Capital Business Credit, 327 P.3d 335 (Colo. Ct. App. 2014), the Colorado Court of Appeals held that an arbitration award recovered from a supplier of defective paint under a breach of warranty cause of action was not proceeds of an “account”, but rather proceeds of a “general intangible.” Millennium Bank […]
Court refuses to avoid a post-petition transfer by a fully secured creditor in violation of the automatic stay because the trustee of the estate failed to show that the estate had been harmed by the transfer or that avoiding the transfer would benefit the
In In re C.W. Mining Co., 749 F. 3d 895 (10th Cir. 2014), the Tenth Circuit Court of Appeals held that a fully secured creditor’s post-petition transfer will not be avoided as an unauthorized transfer of estate property under § 549 of the Bankruptcy Code (the “Code”) or as a violation of the automatic stay […]
Two competing interpretations of a “LIFO” clause can both be reasonable, and, even if one interpretation is more reasonable than the other, it does not mean the contract is unambiguous and that summary judgment is appropriate
In Holladay Bank & Trust v. Gunnison Valley Bank, 752 Utah Adv. Rep. 21, 2014 UT App 17, the Court of Appeals of Utah (the “Court”) held that a district court erred in granting summary judgment to one party in a dispute over the terms of a contract, which included a “last in, first out” […]
Companies Need to Take a “Layered Approach” to Sanctions Compliance: US and EU Expand Sanctions Against Russia
Courtesy Jack Hayes and his colleagues at Steptoe & Johnson, LLP. Read the original article here: http://www.steptoe.com/publications-9852.html On September 12, 2014, the United States and the European Union issued new sanctions against Russia, including sanctions targeting the Russian financial, energy, and defense sectors. New US Sanctions OFAC Trade Restrictions The US Treasury Department, Office of Foreign […]
NH District Court: Sale of repossessed aircraft below book still commercially reasonable absent bad faith
Contributed by Kevin Braun of Bingham McCutchen LLP: United States District Court for the District of New Hampshire holds that creditor’s sale of a repossessed aircraft at well below book value was commercially reasonable where there was no proof of diminished value due to non-repair or proof of bad faith on behalf of seller. Harley-Davidson Credit Corp. […]
Massachusetts: Transfer of funds to court-ordered escrow does not extinguish security interest
Contributed by Kevin Braun of Bingham McCutchen LLP: Lender’s perfected security interest in funds held by debtor was not extinguished, under Article 9 of the Massachusetts UCC, upon transfer of the funds from a bank deposit account to a court-ordered escrow account. Zimmerling v. Affinity Fin. Corp., 14 N.E.3d 325 (Mass. App. Ct. 2014). In 2008, BHC […]
Rhode Island includes commitment fees in interest rate
Contributed by Kevin Braun of Bingham McCutchen LLP: Supreme Court of Rhode Island finds a so-called “commercial loan commitment fee” in a loan agreement to be part of the interest rate charged, leading to a violation of Rhode Island usury laws. Labonte (Am. Steel Coatings, LLC) v. New Eng. Dev. R.I., LLC, 93 A.3d 537 […]
President’s Message – August 2014
I hope this note finds everyone well and enjoying some well-deserved summer vacation time with family and friends. Following our terrific Spring Forum in Chicago, the Trustees met on June 6th for their summer meeting. We had a very productive meeting, the highlights of which included fleshing out the program for our Annual Meeting with our […]
New Member Spotlight – Dora Jimenez
Dora Jimenez is an Assistant General Counsel at New York Life Insurance Company. Dora provides legal support to Private Capital Investors (the private debt investment arm of NYL Investors LLC, which is a wholly-owned subsidiary of New York Life Insurance Company) in connection with the private placements of secured and unsecured debt from domestic and […]
New Member Spotlight – Ralph Dudziak
Ralph Dudziak is a Chicago-based partner in Loeb & Loeb LLP’s finance department and a member of the energy group. He focuses on private placements, project finance and development, leasing, secured lending and securitizations. Ralph’s wide-ranging financial practice serves several U.S. and international financing parties, including insurance companies, banks, leasing companies, investment banks, and other […]
New Member Spotlight – Anthony Goodman
Anthony Goodman is counsel with Babson Capital Management LLC where he advises internal business clients in connection with senior secured loans, mezzanine financings, project financings, private placements, private equity investments and credit tenant leases. Prior to joining Babson, Anthony was a member of the Transactional Finance Group at Bingham McCutchen LLP. Anthony is a graduate […]
New Member Spotlight – Jack R. Hayes
Jack R. Hayes is Of Counsel in the Washington, DC office of Steptoe & Johnson LLP. Jack advises financial institutions and other clients regarding U.S. economic sanctions, export controls, antiboycott, and anticorruption laws and regulations in the context of various international business transactions. His practice includes counseling on due diligence best practices of current and […]
UK Schemes – Stretching the Boundaries
The growing number of foreign companies that seek to take advantage of the UK Scheme of Arrangement (a “Scheme”) is set to increase further as a result of two recent cases that have both stretched the boundaries applicable to Schemes and reiterated the willingness of the English courts (the “Courts”) to extend their jurisdiction to […]
Changes to Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regulation and Enforcement Landscape: Introduction
There has been a lot of action in Canada lately on the anti-money laundering (“AML”) and anti-terrorist financing (“AFT”) regulation and enforcement landscape. First, there was the coming into force on February 14, 2014 of the much anticipated changes to the AML and AFT legislation (collectively, the “2014 Amendments”), which aim to bring Canada’s AML […]
Choice of law: The substantive vs. procedural distinction can affect the award of fees in litigation
In a dispute about the law governing a claim for attorneys’ fees following litigation, the Fifth Circuit held, in MUTUAL CONCEPTS, INC. v. FIRST NAT’L BANK OF OMAHA, 495 Fed.Appx. 514 (5th Cir. 2012), that the contractually chosen law (Nebraska) governed the award of attorneys’ fees, even though the litigation was conducted in Texas. The […]
Failure to provide waivable (but unwaived) notices can support both a breach of contract claim and a claim for wrongful foreclosure
In MATHIS v. DCR MORTG. III SUB, I, LLC, 942 F.Supp.2d 649 (W.D. Tex. 2013), the court granted in part and denied in part the lender’s motion to dismiss a suit filed by a debtor on the basis that the lender and its employees concocted a scheme to foreclose on the property. The court dismissed […]
Payment of rent by administrators: the Game decision (Pillar Denton & ors v Jervis & ors [2014] EWCA Civ 180)
A clear judgment in favour of landlords was handed down on 24 February 2014 by the Court of Appeal in the Game group litigation. This decision changes the position on when rent is payable as an expense of the administration and means that administrators can no longer exercise the tactic of putting companies into administration, […]
Possession of original note with endorsement in blank may be adequate proof of ownership of the secured debt in order to permit foreclosure of the lien
In TYLER v. BANK OF AM., 2013WL 1821754, 2013 U.S. Dist. LEXIS 61383 (Opinion not yet released for publication), where a foreclosing lender has the original note, indorsed in blank, it may proceed to foreclosure. Per the court, “when a note is indorsed in blank, the instrument becomes payable to bearer and may be negotiated […]
Failure to record transfer of deed to assignee can, in absence of additional proof of ownership of note, prevent foreclosure
In MILLER v. HOMECOMINGS FIN., LLC, 881. F. Supp. 2d 825 (S.D.. Tex. 2012), the court held that, where a secured lender seeks to enforce a lien against real property but cannot show that it was the assignee of the secured loan, the mortgagor/debtor has a cognizable cause of action for wrongful foreclosure. Texas courts […]
PPIA Materials Available for Comment Now
The Private Placement Investors Association is seeking comment on three documents, each of which was introduced and discussed at the ACI Spring Forum. Click here for a PDF containing each of the below documents: For Amendment Waiver Best Practices, please contact: R. Edward Ferguson Managing Director Private Capital Investors, NY Life robert_ferguson@nylinvestors.com Office: (212) 576-3908 For Due Diligence […]
Rhode Island finds usury savings clauses unenforceable
In an issue of first impression, Rhode Island Supreme Court holds that usury savings clauses in loan contracts are unenforceable and cannot validate an otherwise usurious loan. NV One, LLC v. Potomac Realty Capital, LLC, 84 A.3d 800 (Feb. 18, 2014) In 2007, NV One, LLC (“Borrower”) and Potomac Realty Capital, LLC (“Lender”) entered into a […]
Renew Your ACIC Membership Online – 2014
The ACIC is pleased to announce that you can now renew your membership online. Just click on the link below, complete the online form, and provide your payment information. We’re happy to make it even easier for you to enjoy all the benefits of being an ACIC Fellow! Renew your ACIC membership!
New Model X Form NPA Posted for Comment!
The Transaction Process Management Committee (“TPMC”) has prepared and posted to the Model Forms page of this website a draft of Model X Form No. 2 of Note Purchase Agreement and is soliciting comments from College Fellows and other interested persons. Helpful comparison versions and a comprehensive cover memo are posted as well. The TPMC […]
Lender’s replacement lien in collateral entitles lender to pre-petition proceeds
Bankruptcy Court holds that senior lender with security interest in debtors’ pre-petition inventory and accounts receivable, and holding replacement liens in the same type of property post-petition, is entitled to proceeds from post-petition sale of inventory acquired pre-petition and reimbursement for post-petition real estate taxes the lender advanced for the debtors over the claims of […]
Washington State Supreme Court rejects the “volunteer rule” bar to equitable subrogation
Washington State Supreme Court rejects the “volunteer rule” bar to equitable subrogation, and adopts the Third Restatement’s more liberal approach towards equitable subrogation in the refinancing context. Columbia Community Bank v. Newman Park, LLC, 177 Wash.2d 566 (2013). Newman Park, LLC (the “Mortgagor”) was a development company owned by twelve members, one of which was a […]
California: Side letter can trigger equitable subordination of lender’s lien
A secret “side letter agreement” between a buyer of real property and its construction lender causes a court to invalidate a seller subordination agreement, thereby allowing the seller’s contractually subordinated lien to prime the construction lender’s priority lien. In Citizens Business Bank v. Gevorgian, 218 Cal.App.4th 602 (2013), a California state appellate court held that a […]
Idaho: Failure to comply with statutory “exemption” procedure will not defeat perfection
A perfected security interest in collateral continues to exist in that collateral despite a secured creditor’s failure to comply with a separate state statute requiring it to file a claim of “exemption” from a levying creditor. In Keybank Nat’l Ass’n v. PAL I, LLC, 155 Idaho 287 (2013), the Idaho Supreme Court held that a secured […]
Washington State: Promissory Notes Secured by Real Estate Governed by the UCC
Under Washington state law, a promissory note secured by a real estate mortgage is governed by the Washington UCC as a security interest in personal property, not by the recording statute as an interest in real property. In In re HW Partners, LLC, No. 11-03366-JAR11, 2013 WL 4874172 (Bankr. E.D. Wash. 2013), the Bankruptcy Court for the […]
Spring Investment Forum – 2014
Come up with some resources on how to find qualified local counsel. – start with counsel you know, many have local branch offices – local law societies or bar association – martindale.com – pick a country, sort by “peer review rating” – Google the topic for articles, and see where author works Click here to […]
Requirements for Enforcing a Subordination Agreement under the UCC
Requirements for Enforcing a Subordination Agreement under the UCC. Caterpillar Financial Svcs. v. Peoples Nat. Bank, 710 F.3d 691 (7th Cir. 2013). In 2008, Peoples National Bank (“Bank”) lent S Coal $1.8 million, which loan was secured by certain mining equipment (“Equipment”). The Bank was the third lender to secure debt on the Equipment. The […]
Fair Value Debt-for-Debt Exchange Does Not Create Disallowable Unmatured Interest under the Bankruptcy Code
Fair Value Debt-for-Debt Exchange Does Not Create Disallowable Unmatured Interest under the Bankruptcy Code. Official Committee of Unsecured Creditors v. UMB Bank, N.A. (In re ResCap), 501 B.R. 549 (Bankr. S.D.N.Y., Nov. 15, 2013). In a matter of first impression of importance to bondholders, Judge Glenn ruled on November 15 in ResCap that fair value […]
Credit Bids May Be Limited for Cause, Including Encouraging Robust Bidding and Uncertain Secured Status
Credit Bids May Be Limited for Cause, Including Encouraging Robust Bidding and Uncertain Secured Status. In re Fisker Automotive Holdings, Inc., 2014 WL 210593 (Bankr. D. Del., Jan. 17, 2014). Secured creditors, and more particularly loan-to-own investors, rely on their right to credit bid their claims in bankruptcy sales of their collateral, but this right […]
Determining Standing to Initiate Foreclosure Proceedings. Bank of America, NA v. Inda (No. 107,999 Kan. Ct. App. Mar. 8, 2013). In 2007, Dennis O. Inda (“Inda”) executed and delivered a note for $244,000 plus interest (“Note”) to Pulaski Bank (“Pulaski”). As security for the Note, Inda and his wife signed a Mortgage (“Mortgage”) on their […]
Spotlight on New Members – February 2014
As we all know, an organization cannot exist without members! Please encourage attorneys in our practice area to join the ACIC, and do what you can to make our new members feel welcome, in particular by keeping an eye out for our new members at the Spring and Fall conferences. We will periodically update this […]
President’s Message – January 2014
President’s Message January 2014 — Hugh McCrory (MetLife) If you want “new”, the American College of Investment Counsel is the place to be in 2014! This newsletter – to be getting a new name soon with input from all of you – is just a small part of the exciting developments that are being rolled […]
Looking Forward to the ACIC Spring Forum, April 24-25
Save the date for the ACIC Spring Forum in Chicago, April 24-25! The Four Seasons Hotel Chicago 120 East Delaware Street Chicago, IL 60611 Call the hotel directly to book your room no later than April 2, 2014 to qualify for the ACIC discounted room rate of $332.00/night, single or double plus applicable taxes CLE ACIC […]
ACIC Annual Fall Meeting, October 16-17, 2014
The inspiration behind this year’s annual meeting theme, “The Search for the Missing Yield: Where in the World Is My ROI?” comes from the popular geography series Where in the World Is Carmen Sandiego? In the spirit of Carmen Sandiego, we, too, will travel the world in search for new opportunities for the US private placement market […]
