2018

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In recent years, the UK Government has consulted on, inquired into and produced a number of reports on issues relating to insolvency and corporate governance, and their reform.  Some of these considerations were proactive, while others were reactive, primarily to a series of high profile corporate failures in the UK in recent years. Among those […]

Introduction In the July issue of the ACIC Private Notes, we discussed the implications of the Ontario Superior Court of Justice’s decision in Solar Power Network Inc. v. ClearFlow Energy Finance Corp., 2018 ONSC 7286 with respect to whether using nominal annual rate conversion formulas in loan agreements complies with Section 4 of Canada’s federal Interest Act, RSC 1985, […]

Defendant CashCall, Inc. (“CashCall”) makes consumer loans to borrowers with a poor credit history.  Its signature product was an unsecured $2,600 loan payable over a 42-month period with a percentage rate of either 96 percent per annum or 136 percent per annum.  Plaintiff Eduardo De La Torre (“De La Torre”) filed a lawsuit in the […]

Street v. ACC Enters., LLC, 2018 U.S. Dist. LEXIS 167299 (D. Nev. Sept. 27, 2018) Plaintiff Bart Street III (the “Plaintiff”), a Nebraska entity, is a money lender.  Defendants ACC Enterprises, LLC, ACC Industries, Inc. (collectively, the “ACC Entities”) and Calvada Partners, LLC (collectively with the ACC Entities, the “Defendants”), all Nevada entities, allegedly own […]

Claims traders regularly agree to buy and sell claims based on little more than a series of emails confirming the economic terms of the trade.  Trades are later memorialized in definitive documentation, but it is widely accepted in the market that reaching agreement on price and amount represents a binding commitment to close the trade.  […]

Pac. W. Bank v. Fagerdala USA-Lompoc, Inc. (In re Fagerdala USA-Lompoc, Inc.), 891 F.3d 848 (9th Cir. 2018) Fagerdala USA – Lompoc, Inc. (“Fagerdala”) commenced a chapter 11 bankruptcy in the United States Bankruptcy Court for the Central District of California (the “Bankruptcy Court”).  Fagerdala’s principal asset was real property worth approximately $6 million.  Pacific […]

No Exemplary Damages as a result of Fraudulent Financing Statement Filing In the case of Abuzaid v. Anani, LLC, No. 05–16–00667–CV, 2017 WL 5590194, 2017 Tex. App. LEXIS 10936 (Tex. App—Dallas Nov. 21, 2017), the Court of Appeals of Texas (the “Court“) reviewed the trial court’s judgment in a case involving alleged fraudulent filing of UCC […]

Getting to Know the Officers and Trustees Have you ever wondered how the Officers and Trustees got started in the ACIC?  Or are you interested in finding fun things (other than work) to talk about during networking?  Below some of your Officers and Trustees have answered both serious and not-serious questions about themselves.  Want to […]

Claim Arising out of Equity Redemption is Subject to Mandatory Subordination in Bankruptcy In In re: Caprock Oil Tools, Inc., 585 B.R. 832 (Bankr. S.D. Tex. 2018), the United States Bankruptcy Court for the Southern District of Texas determined that a former equityholder’s claim in respect of payments under a stock redemption agreement was subject to mandatory […]

An Assignment Of A Promissory Note Carried With It An Assignment Of The Guarantee Thereof Even Where No Assignment Of The Guarantee Was Specified In The Allonge.  Jenzack Partners LLC v. Stoneridge Associates, LLC, et. al., 183 Conn. App. 128 (July 3, 2018)              In July 2006, Stoneridge Associates, LLC (“Debtor”) obtained a construction loan […]

FERC Changes to PJM Capacity Market.  In an action that will impact finance transactions with respect to projects located within the PJM market, the Federal Energy Regulatory Commission (“FERC”) issued an order in late June of this year rejecting market revisions proposed by PJM Interconnection, LLC (“PJM”) to its capacity market structure to accommodate State […]

Trial court erred in initial proceeding and again on remand by failing to permit successor bank to deduct its expenses prior to distributing sale proceeds, in accordance with participation agreements; a participation agreement and Georgia precedent required proceeds to be distributed pro rata based on ownership interest in the loans. Community & Southern Bank v. First […]

South Carolina Supreme Court clarifies Single Business Enterprise criteria: shared ownership, shared management, and a lack of corporate formalities are insufficient in proving Single Business Enterprise where statutory requirements for corporate structure allow for lack of corporate formalities and there is no evidence of bad faith; Single Business Enterprise requires evidence of bad faith, abuse, […]

In the context of a close corporation, a minority shareholder may have a direct cause of action for breach of fiduciary duty against a majority shareholder(s) based upon the majority’s oppressive conduct. Tri-State Petroleum Corp. v. Coyne, 240 W. Va 542 (2018). Five siblings owned equal shares and partnership interests, respectively, in two small corporations and […]

Eleventh Circuit Court of Appeals extends “equitable mootness” doctrine and dismisses an appeal of the confirmation of a plan of reorganization for Jefferson County Alabama.  Bennett v. Jefferson County, Alabama,  2:14-cv-00213-SLB (11th Cir. 2018). The U.S. Court of Appeals for the Eleventh Circuit Court upheld a bankruptcy court’s order retaining supervisory authority over Jefferson County, Alabama’s […]

Six-Year Statute of Limitations Under Vermont UCC, Instead of Fourteen-Year Statute of Limitations for a witnessed promissory note Under Vermont Statutes, Applied To Claim To Recover On Promissory Note.  Clark v. DiStefano, 2018 WL 3799978 (VT, August 10, 2018). In December 2006, Richard DiStefano (“Debtor”) executed a witnessed promissory note in the aggregate principal amount […]

District Court Holds That Acceleration Of The Maturity Date Of A Promissory Note Secured By A Mortgage Does Not Affect The Maturity Date Of Said Mortgage for the purposes of the Massachusetts obsolete mortgage statute.  Gelfgatt v. U.S. Bank National Association, 2018 WL 3614139 (D. Mass., July 27, 2018) In February 2005, Leon Gelfgatt (the […]

Capital One Equip. Fin. Corp. v. Adela Inc., No. 17‑cv‑0304, 2017 U.S. Dist. LEXIS 181632 (N.D. Ill. Nov. 2, 2017) In a motion for summary judgment, the District Court for the Northern District of Illinois (the “Court”) found that borrowers and guarantors were in default and liable to the creditor for the unpaid amounts on […]

FirstMerit Bank, N.A. v. Kloysner Grp., LLC, No. 16‑cv‑4930, 2017 U.S. Dist. LEXIS 183695 (N.D. Ill. Nov. 6, 2017) In an action for violations of various sections of the Illinois Uniform Fraudulent Transfer Act, the District Court for the Northern District of Illinois (the “Court”) denied the Defendants’ Motion to Dismiss for lack of subject‑matter jurisdiction […]

Bankruptcy Court in Delaware Rules Anti-Assignment Clause in Promissory Note Enforceable Over UCC Anti-Assignment Rules – In re Woodbridge Group of Companies, LLC, et al., No. 17-12560 (Bankr. D. Del. June 20, 2018) On June 20, 2018, Judge Carey of the Bankruptcy Court in Delaware ruled that an anti-assignment clause in a promissory note was […]

Brandt v. FDIC (In re Equip. Acquisition Res., Inc.), 560 B.R. 501 (N.D. Ill. Bankr. 2016) The Bankruptcy Court for the Northern District of Illinois (“Bankruptcy Court”) held that: (i) the common law and statutory defenses which preclude claims against the Federal Deposit Insurance Corporation (the “FDIC”) as the receiver for a failed bank based on a fraudulent scheme between […]

Secured Creditors Fail to Establish Ability to Waive Security Interests in Order to Qualify as Unsecured Creditors For Purposes of Filing Involuntary Chapter 11 Petition — In re Taberna Preferred Funding IV, Ltd., 578 B.R. 244 (Bankr. S.D.N.Y. 2017) In November, 2017, Judge Vyskocil of the Bankruptcy Court for the Southern District of New York […]

“Lex Agrokor” Introduction In April 2017, the Croatian government adopted the Act on Extraordinary Administration Proceedings in Companies of Systemic Importance for the Republic of Croatia (“EA Act”), which sets out a framework for an extraordinary, pre-insolvency restructuring proceeding for companies that are deemed to be of systemic relevance for the Croatian economy as a whole. The […]

Aaron John Borden.  Aaron is a Vice President and Corporate Counsel at Prudential Capital Group based in Los Angeles.  Aaron spends his time working on private placement investments, private equity invesments and mezzanine and subordinated debt investments in the U.S. and internationally.  Prior to joining Prudential in 2017, Aaron was a shareholder at Vedder Price P.C. Randy Creighton.  Randy […]

UK Court judgment on the meaning of “control” for the purpose of noteholder enforcement The English High Court has interpreted the standard Treasury Notes provision in a New York law governed indenture and held that a majority senior secured noteholder (the “Majority”) did not control the issuer of €290 million 11.75% senior secured notes (the […]

Happy Summer 2018 to all our members! We had a tremendous Spring Investment Forum in Chicago in April.   Bill Bulmer (Prudential) and Cathy Hood (Pillsbury) orchestrated “Chicago – Our Kind of Town” which showcased panels on energy financing, private equity, project financing, private ratings, and restructuring and intercreditor issues, while also offering two panels with […]

Overview The Ontario Superior Court of Justice (the “Court”) recently handed down the only Canadian decision to date considering nominal annual rate conversion formulas in Solar Power Network Inc. v. ClearFlow Energy Finance Corp., 2018 ONSC 7286 (“Solar Power”). Solar Power Network Inc. and its affiliated companies (collectively, “SPN”) are renewable energy companies that specialize in […]

By: Robert S. Bozarth (Fidelity National Title Group) and Stevens A. Carey (Pircher, Nichols & Meeks LLP) This article will propose, for review and comment, a form of equity title insurance endorsement. [1] By “equity title insurance,” the authors mean title insurance provided to the purchaser of an equity interest in an entity (typically, a limited […]

The ACIC returned to their home away from home, the Four Seasons Hotel in Chicago, for the 2018 Spring Investment Forum. The ACIC drew its largest spring meeting attendance since 2010, with 184 participants. This year, the event was organized by co-chairs, William H. Bulmer, The Prudential Insurance Company of America, and Catherine C. Hood, Pillsbury Winthrop Shaw […]

Vitatech International, Inc. v. Sporn, 2017 WL 4876175 (Cal. Ct. App. 2018). An agreement to settle a contract dispute that provided for a stipulated judgment if payment was not made created an unenforceable penalty because the defendant never admitted to liability on the underlying claim and the increased liability was disproportionate to the harm caused.   […]

Lucas v. Deutsche Bank National Trust Company, 2018 WL 300393 (Cal. Ct. App. 2018). In a dispute between a lender and a borrower for attorney fees, the Court of Appeal did not award the lender attorney fees where the relevant provisions of the contracts did not sufficiently provide for such attorney fees. In March 2007, […]

Ultra Petroleum Corp. (HoldCo), Ultra Resources, Inc. (OpCo), and other Ultra entities (collectively, the Debtors) filed for bankruptcy protection on April 29, 2016. The Debtors classified the OpCo Notes as unimpaired under the plan of reorganization, yet objected to the Make-Whole Amount triggered as a result of the filing. The Debtors acknowledged that OpCo was […]

Dray v. Revah, 2017 WL 6523566 (Cal. Ct. App. 2017). A loan agreement’s dispute resolution clause containing an arbitration provision was superseded by a later executed promissory note for the same underlying loan that did not also include an arbitration provision.   Defendant Haim Revah (“Revah”) and plaintiff Alain Dray (“Dray”) entered into a loan […]

Oversecured Creditor’s Motion for Payment of Postpetition Late Charges and Prepayment Premium Denied In In re: Amigo PAT Texas, LLC, Debtor, 579 B.R. 779 (2017), the court evaluated a motion by People’s United Equipment Finance Corp. (“PUEFC”), as creditor, for payment of post-petition interest, late charges, prepayment premium and attorney’s fees by Amigo PAT Texas, LLC, […]

Seller not Deemed to be Third-Party Beneficiary of Loan Agreement In First Bank v. Brumitt, 519 S.W.3d 95 (Tex. 2017), the Supreme Court of Texas, reversed the judgment of the Houston Court of Appeals and determined that the seller of a company was not a third-party beneficiary of a lending transaction. Richard Brumitt (“Brumitt”), the owner […]

Zelby Holdings, Inc. vs. Videogenix, Inc., 92 Mass. App. Ct. 86 (Aug. 18, 2017) In March 2005, the predecessor to VideogeniX, Inc. (the “Borrower”) issued a promissory note for $30,000 (the “Promissory Note”) in favor of the predecessor to Zelby Holdings, Inc. (the “Lender”) and with a maturity date of March 2006.  With the Promissory […]

Background:  Until recently, insurers that held securities rated by an NAIC-approved Nationally Recognized Statistical Ratings Organization (i.e. a “CRP” or “rating agency”) have not had to submit financial information on those securities to the Securities Valuation Office of the NAIC (the “SVO”) for a rating designation.   Instead, insurers have held capital based on the ratings […]

Gibson v. Ameris Bank, 420, S.C. 536, 804 S.E.2d 276, 2017 S.C. App. LEXIS 81 In order to purchase and renovate an apartment complex in North Charleston, a limited liability company obtained a $2.8 million loan from Ameris Bank (“Ameris”). However, before this loan was obtained, the guarantor of the loan (the “guarantor”) had first […]

Rebel Auction Co. v. Citizens Bank, 343 Ga. App. 81(Ct. App. Ga. 2017) The Citizens Bank (the “Bank”) filed a petition for writ of possession against Big Metal Construction, Inc. (“Big Metal”) and Gina R. Bryant (collectively, the “Borrowers”), alleging that the Borrowers had defaulted on two promissory notes in favor of Bank and seeking […]

IPayment, Inc. v. Grainger, No. 15 CVS 2234, 2017 N.C. App. LEXIS 1087*; 808 S.E.2d 796 An asset purchase agreement governed by New York law provided that any dispute or claim arising out of or related to the agreement would be fully and finally resolved by binding arbitration in the city and county of New […]

For the Benefit of Your Successors and Assigns, A Brief Look-Back at ACIC History The “About” tab on the ACIC Website will tell you that the American College of Investment Counsel was founded in November 1981 by a group of ten lawyers.  Incorporated by a special act of the Connecticut Legislature in 1982, the College […]

Miller v. FiberLight, LLC, 343 Ga. App. 593 (Ga. Ct. App. 2017) A former minority member of a Delaware limited liability company sued the majority members and the chair of the board of directors of the company alleging breach of fiduciary duties owed to him as a minority member. The minority member claimed the defendants […]

American First Federal, Inc. v. Gordon, 173 Conn. App. 573 (June 6, 2017) Around September 2006, Sheldon M. Gordon (the “Borrower”) and Sovereign Bank (the “Bank”) executed a business loan agreement pursuant to which the Borrower issued a promissory note in favor of the Bank in the original aggregate principal amount of $3,000,000 (the “Promissory […]

Joshua Deason is a partner in the New York office of Willkie Farr & Gallagher LLP. He practices in the Firm’s Finance Practice Group of the Corporate and Financial Services Department, focusing on private placement, banking and institutional finance. Joshua represents insurance companies, institutional investors and issuers in domestic and cross-border institutional private placement transactions. […]

RED Mortgage Capital, LLC v. Shores, LLC, et al., No. 2:16‑ 678, 2017 WL 1196170 (S.D. Ohio 03/31/17) Background In a breach of contract and declaratory judgment action against a borrower, the District Court for the Southern District of Ohio (the “Court”) held that the execution of a guarantee acknowledging the existence of an unsigned document satisfied Ohio’s […]

Kaplum v. Edgebrook Acquisition 2, LLC, 2016 WL 4493534 (N.D. Ill. Aug. 25, 2016) In an action against bank agents of a failed bank, an Illinois federal court (the “District Court”) has held that (i) only the Federal Deposit Insurance Corporation receiver (“FDIC‑R”) has standing to sue bank agents for derivative claims of unlawful dissolution or breach of […]

In the Matter of Spanish Peaks Holdings II, LLC, 2017 WL 2979660, 64 BCD 105 (9th Cir. 2017) Background In a proceeding under Chapter 7 of the United States Bankruptcy Code (the “Code”), the United States Court of Appeals, Ninth Circuit (the “Ninth Circuit”), authorized the sale of property subject to bankruptcy proceedings free and clear […]

Second Circuit Affirms Lower Court Decisions Denying Make-Whole Premium and Endorses Market Interest Rate in Chapter 11 Cramdown Plans – BOKF, NA v. Momentive Performance Materials Inc. (In re MPM Silicones, L.L.C.), 874 F.3d 787 (2d Cir. 2017) The United States Court of Appeals for the Second Circuit has issued a decision containing both favorable and unfavorable rulings […]

CHICAGO — Our Kind of Town There are 106 miles to Chicago and 70 days to the  ACIC Spring Investment Forum.   We have a full agenda, plenty of speakers,  and it’s coming soon. Don’t forget to wear your sunglasses. – Elwood Blues Please plan to attend the 2018 ACIC Spring Investment Forum on April 19 – 20 at the […]

Bowling Green Sports Center, Inc. v. G.A.G. LLC, Ill. App. (2d) 160656, 77 N.E.3d 728 (2017) In a dispute between senior and junior lenders, the Illinois Appellate Court (the “Court”) has held that in the event of a breach of an intercreditor agreement for not obtaining a junior lender’s consent prior to a senior lender’s increase of […]

Happy New Year to all of our Fellows!  We just completed a great year for the American College of Investment Counsel and look forward to building on our momentum to enhance and grow our College. Highlights of 2017 included our Spring Forum in Chicago chaired by Mary Jo Quinn (Allstate) and Melody Cross (Schiff Hardin), […]