2019

By: Anthony D. Yager, Chapman and Cutler LLP Happy Holidays to all! Before the holiday season kicks into high gear and a holiday food and drink coma wipes 2019 from my mind, I wanted to take a moment to reflect upon the College’s accomplishments in 2019 and look forward to 2020 for a moment. First, […]

In the latest development in the Ultra make-whole saga, on November 26, 2019 the United States Court of Appeals for the Fifth Circuit granted the Noteholder’s Motion for Reconsideration or Rehearing En Banc, reconsidered its January 17, 2019 decision (the “Original Fifth Circuit Opinion”) and issued a substitute opinion (the “New Fifth Circuit Opinion”).  Our prior updates on the […]

2019_meeting_and_conference_summary.pdf

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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 […]

Fifth Circuit determines priorities of liens on agricultural products In Fishback Nursey, Incorporated; Surface Nursey, Incorporated v. PNC Bank, National Association, 920 F.3d 932 (5th Cir. 2019), the Fifth Circuit Court of Appeals was tasked with determining the relative priority of liens on agricultural products claimed by PNC Bank, National Association (“PNC”), Fishback Nurseries, Incorporated (“Fishback”) […]

Texas Supreme Court holds that waiver of the statue of limitations with respect to anti-deficiency laws was not void against public policy In Godoy v. Wells Fargo Bank, N.A., 575 S.W.3d 531 (Tex. 2019), the Texas Supreme Court considered whether certain statute of limitation waivers contained in a guaranty agreement were void against public policy. GDG […]

Diamond Enterprises, Ltd. v. [an individual with initials MY], BAP No. CC-18-1337-FLKu (B.A.P. 9th Cir. July 10, 2019) In Diamond Enterprises, Ltd. v. [an individual with initials MY (“MY”)], the Ninth Circuit Bankruptcy Appellate Panel (the “BAP”) held that, where a bankruptcy court enters an order modifying a confirmed plan in a material way, the […]

Odyssey Reinsurance Co. v. Nagby, 2019 U.S. Dist. LEXIS 111794 (S.D. Cal. July 2, 2019) In Odyssey Reinsurance Co. v. Nagby, the United States District Court for the Southern District of California found the sole directors and owners of a defunct insurance agency liable for constructive fraudulent transfer under California’s version of the Uniform Fraudulent Transfer […]

Hernandez v. Enterprise Rent-a-Car Co., 2019 Cal. App. LEXIS 618 In Hernandez v. Enterprise Rent-a-Car Co., the California Court of Appeal, First Appellate District, affirmed the trial court’s grant of summary judgment in favor of defendant, Enterprise Rent-a-Car, holding that Enterprise, as asset purchaser, was not liable as successor-in-interest (through two separate acquisition transactions, one non-bankruptcy […]

The sweeping California Consumer Privacy Act of 2018 (the “CCPA“) takes effect on January 1, 2020 and the state will begin enforcement as of July 1, 2020. By granting California consumers expanded control over their personal information, the law imposes strict and novel obligations on all qualified businesses that gather, use or sell such data. The […]

Takeaways for Private Placement Investors following PG&E’s Bankruptcy By: Chiraag Kumar (MetLife) Private placement investors that often negotiate “anti-Cookson clauses” and “Adelphia provisions” are reminded that bankruptcy proceedings (such as those of namesakes Cookson Group and Adelphia Communications) often lead investors to re-examine their financing agreements in order to address areas of risk that were […]

Lender who assigned its interest in a note prior to filing replevin action for collateral securing the note had its action dismissed for lack of standing despite attempted substitution of assignee as plaintiff.   Ion Bank v. J.C.C. Custom Homes, LLC, 189 Conn.App. 30 (2019). By: Kevin Braun (Morgan Lewis) Ion Bank (the “Original Lender”) filed an action of replevin […]

Appeals court holds that a holder of a note cannot charge a prepayment premium upon acceleration unless the note clearly provides for it. Forty Pine, LLC v. Country Bank for Savings, 95 Mass.App.Ct. 1108 (2019). By: Kevin Braun (Morgan, Lewis) In September 2009, defendant Country Bank for Savings (the “Bank”) extended a commercial note in the […]

Committee Reports By: Mikhel Schecter (Paul Weiss) Membership Committee The primary responsibility of the Membership Committee is to consider applications for ACIC membership and to recommend those applicants meeting the membership criteria of the College to the Board of Trustees for a membership vote.  In discharging this responsibility, the committee considers the totality of a […]

No damages were found where failure to deliver notice of default was not proximate cause of Lender’s claimed damages and Lender failed to take steps to mitigate losses. In re Lexi Development Company, Inc., Case No. 10-27573-BKC-AJC, 2019 WL 2426454 (Bankr. S.D. Fla. June 6, 2019). By: Jeff Duston (King & Spalding) An unsecured lender made […]

Eleventh Circuit held that New York UCC provision does not give rise to a private right of action to a secured party that was not an assignee of an account.  Durham Commercial Capital Corp. v. Ocwen Loan Servicing, LLC, No., 17-15572, 2019 WL 2290886 (11th Cir. May 29, 2019). By: Jeff Duston (King & Spalding) A […]

Letter of intent communicating intent not to be bound until execution of final acquisition documents precluded formation of a binding contract of sale, notwithstanding the words, actions and performance of the parties. Gulf Coast Hospice LLC v. LHC Group Inc., 273 So.3d 721 (Miss. 2019). By: Jeff Dutson (King & Spalding) The prospective seller (the “Seller”) […]

Debtor’s pledge of his partnership interest was unenforceable under Delaware law and the proof of secured claim filed by the Creditor was disallowed. The North Carolina court looked beyond the Security Agreement’s choice of law provision and to the local law of the state of incorporation. In re James Alexander Mason, Jr., 600 B.R. 765 (Bankr. […]

Creditor does not have a perfected security interest in Debtor’s property when it files a UCC-1 Financing Statement which lists inaccurate identifying information for the Debtor and does not adequately describe the collateral. In re WasteTech, 2019 WL 2351877 (Bankr. N.D. Ga. May 31, 2019). By: Jeff Dutson (King & Spalding) In 2017, the Debtor entered […]

Cedar Square L.L.C. v. TCF National Bank, No. 16-1076, 2018 WL 4496327 (E.D. Wisc. Sept. 19, 2018) In a dispute involving alleged liability over a bank’s refusal to grant a loan for development of a construction project, the U.S. District Court, Eastern District of Wisconsin (the “Court”) granted defendant’s 12(b)(6) motion to dismiss in part, […]

Cohen v. Chernushin et al, (In re Chernushin), 2018 WL 6729716, 66 BCD 159 (10th Cir. 2018) In an action involving an adversary proceeding commenced by a Chapter 7 trustee to sell certain property, the United States Court of Appeals for the 10th Circuit (the “Court”) affirmed the U.S. District Court, District of Colorado, who […]

Desai v. Hanmi Bank, No. 1803621, 2018 WL 5264223 (E.D. Ill. Oct. 23, 2018) In a suit regarding a bank’s potential breach of loan documents, breach of good faith and fair dealing, and failure to fulfill duties of a receiver, the US District Court, Northern District of Illinois (the “Court”) dismissed the claims by granting the […]

In re Energy Future Holdings Corp., et al. v. Morgan Stanley Capital Group, Inc., No. 18-1957, 2019 WL 2535700 (3d Cir. June 19, 2019) Overview: The Court of Appeals for the Third Circuit held that adequate protection payments and bankruptcy plan distributions payable to two groups of creditors should be allocated pro rata based on […]

In re Paragon Offshore PLC, 598 B.R. 761 (D. Del. 2019) Overview: The Bankruptcy Court for the District of Delaware denied a motion to determine that the Court did not have power under Article III of the U.S. Constitution to issue a final order on a core fraudulent transfer claim brought against a non-claimant defendant.  […]

The Response of Canadian Banks to the Supreme Court of Canada’s Redwater Decision By: Danielle Maksimow, Norton Rose Fulbright Canada LLP Introduction On January 31, 2019, Canada’s highest Court, the Supreme Court of Canada, shocked the Canadian banking and insolvency worlds when it issued the highly anticipated and ground-breaking decision of Orphan Well Association v. Grant […]

The Extraordinary Administration of Agrokor d.d. By: Tom Bannister, Akin Gump Strauss Hauer & Feld LLP The “Implementation Commencement Date” pursuant to Agrokor d.d.’s (Agrokor) Settlement Plan occurred on 1 April 2019, and with it the business, assets and operations of the Agrokor group (the group) transferred to a new creditor-owned group, the Fortenova group. […]

In re Aegean Marine Petroleum Network Inc., 599 B.R. 717 (S.D.N.Y. 2019) Overview: The Bankruptcy Court for the Southern District of New York (the “Court“) denied debtors’ request to release potential claims of third parties on a nonconsensual basis as part of the debtors’ chapter 11 plan.  The Court found that, under Second Circuit precedent, […]

Together with the Board of Trustees and the Education Committee, co-chairs Nicole Windsor and Alfredo Cantoral invite you aboard as we embark on a grand adventure through key destinations on an insurance company’s investment roadmap, together with the ACIC’s 2019 Annual Meeting, on October 17th and 18th. Our adventure will begin at the Grand Central […]

Introduction to New ACIC Members By: Luke Weedon, Baker Botts LLP David Botter is a partner in Akin Gump’s financial restructuring practice where he advises on large, complex restructuring cases, both out of court and in Chapter 11. He frequently handles multijurisdictional and cross-border matters for both distressed companies and major creditors, with an emphasis on […]

Spring Flash Sale – The Debenhams Pre-Pack By: Tom Bannister, Akin Gump Strauss Hauer & Feld LLP Introduction In the long-running saga of the demise of another stalwart of the British high street, Debenhams, a milestone was reached when the business of Debenhams was sold to a lender group by way of an English pre-packaged […]

President’s Message By: Armando Gamboa, Prudential Capital Group Well, it is finally summer in the Midwest.  After months of being teased with a decent day here and there, it has finally warmed up in Chicago. The College has had an outstanding first half of the year and more is to come in the second half. […]

A Primer on the Qualified Opportunity Zone Regulations The December 2017 “Tax Cuts and Jobs Act” offers significant tax incentives for “qualified opportunity funds”  investing in “qualified opportunity zones” (“QOZ”)[1].  The Department of Treasury issued the first set of Opportunity Zone regulations on October 19, 2018 and a second set of opportunity zone regulations on […]

Fifth Circuit Holds Make-Whole Premium Should be Disallowed under Bankruptcy Code In In re: Ultra Petroleum Corp., Case No. 17-20793 (5th Cir. Jan. 17, 2019), the Fifth Circuit Court of Appeals held that certain creditors (the “Unsecured Creditors”) of Ultra Resources, Inc. (“Debtor”) were not impaired for purposes of voting on a reorganization plan even though […]

Texas Court upholds interest of Senior Secured Creditor against Garnishment by Junior Creditor In Legacy Bank v. Fab Tech Drilling Equipment, Inc, 2018 WL 6928971 (Tex.App. – Eastland), in an issue of first impression, the Court of Appeals of Texas evaluated whether garnishment of a debtor’s accounts receivable by a junior judgment lien creditor would trump […]

Cohen v. TNP 2008 Participating Notes Program, LLC, 31 Cal.App.5th 840 (2019) An attorney for holders of promissory notes issued by a real estate investment company lacked standing, as agent of his client-investors, to enforce arbitration agreements in the promissory notes subscription agreements.  However, the real estate investment company’s parent company exercised sufficient control over […]

In re Pettit Oil Co., No. 17-60081, 2019 WL 1104662 (9th Cir. Mar. 11, 2019) A trustee, exercising her “strong-arm” powers as a hypothetical judicial lien creditor, had priority over a petroleum company that delivered fuel to a debtor on a consignment basis, both in consigned fuel held in debtor’s tanks and in accounts receivable […]

In re Orexigen Therapeutics, Inc., 596 B.R. 9 (2018), United States Bankruptcy Court, D. Delaware Overview: The Bankruptcy Court for the District of Delaware denied a motion by an alleged creditor seeking an order determining that it was entitled to disputed funds based on its right of setoff under state law.  The Court held that, […]

In re Taberna Preferred Funding IV, Ltd., 594 B.R. 576, United States Bankruptcy Court, S.D. New York Overview: The Bankruptcy Court for the Southern District of New York granted a motion to dismiss in an involuntary chapter 11 petition against a structured finance entity known as a collateralized debt obligation (CDO) filed by certain of its […]

In re Lehman Brothers Holdings Inc., 591 B.R. 153 (2018), United States Bankruptcy Court, S.D. New York Overview: The Bankruptcy Court for the Southern District of New York denied a motion to permit a plan administrator to cause a debtor to issue preferred stock under the terms of its pre-effective date charter in substitution for Enhanced […]

Getting to Know Our Madeleine Crouch & Co. Account Executive , CJ Marchain ACIC events are engaging and entertaining because of the efforts from our co-chairs, the officers, the trustees, the committees, and the speakers, but the ACIC runs smoothly because of the work of our Madeleine Crouch & Co., Inc. (“MCC”) Account Executive and her team.  […]

Corporate officer and director usurped the corporate opportunity of a supplier corporation in which he was also a director by choosing to insource services previously provided by the supplier; proper remedy was to impose a constructive trust on profits attributable to the insourcing. Mitchell v. K&B Fabricators, Inc., 2018 WL 4657076 (Sup. Ct. Ala. 2018). […]

Conroy v. Amos, 338 F. Supp. 3d 1309 (M.D. Ga. 2018) Georgia law warrants the dismissal of a derivative claims if a corporation’s decision not to pursue the claims is based upon a recommendation from an independent and disinterested committee and a reasonable and good faith investigation. Georgia’s derivative-action dismissal statute, O.C.G.A. § 14-2-744, authorizes […]

Sweely Holdings, LLC, 296 Va. 367 (2018) Virginia Supreme Court held that where a bank explicitly preserves its right to foreclosure in a forbearance agreement the bank has a right to foreclose on property despite having other remedial options available to it under the forbearance agreement. Sweely Holdings, LLC (“Sweely”) and bank (“Bank”) entered into […]

Guarantee Co. of N. Am. v. Gary’s Grading & Pipeline Co., 746 F. App’x 831, 834 (11th Cir. 2018). The Eleventh Circuit Court of Appeals affirmed the district court’s decision that a co-manager had apparent authority to bind LLC to bond indemnification agreement under the Georgia Limited liability Company Act. The co-manager of a Georgia limited […]

Nationwide Mutual Insurance Company v. Eagle Window & Door, Inc., 424 S.C. 256 (S.C. Sup. Ct. 2018) No successor liability of bankruptcy purchaser in a contribution action; officer, director and shareholder continuity are required for a “mere continuation” analysis. Commonality of officers, standing alone, does not render liability. Homeowners brought a construction defect suit against […]

Besaw, Trustee of Revocable Living Trust of Ernest P. Giroux v. Giroux, 2018 WL 6714805 (2018) Promissory Note holder’s right to sue for the return of collateral accrued, and statute of limitations period began to run, not on the initial failure to pay but when borrower failed to pay balance due within 45 days of […]

Membership Committee The primary responsibility of the Membership Committee is to consider applications for ACIC membership and to recommend those applicants meeting the membership criteria of the College to the Board of Trustees for a membership vote.  In discharging this responsibility, the Membership Committee considers the totality of a candidate’s responses in his/her application, with particular emphasis […]

People’s United Bank v. B & B Fire Protection, Inc., 94 Mass.App.Ct. 626 (2019) Guaranty executed with apparent, but not actual, authority was enforceable in a situation when the guarantor’s owner failed to repudiate the guaranty upon learning of it, and instead drained the guarantor’s assets. Plaintiff People’s United Bank (the “Lender”) brought a collection […]

The ACIC is pleased to introduce our new members since June 2018: Paul Epstein is a partner in the Project Development & Finance practice of Shearman & Sterling.   He focuses on complex financings, projects and acquisition matters in the infrastructure and energy sectors, both domestically and internationally.  Paul represents lenders and issuers including corporations, insurance companies, […]

Lights, Camera – CLE! Join us April 4-5, 2019 at the Four Seasons in Chicago for the first annual Golden Gavels award show, a.k.a. the Spring conference. We’ve gathered a fantastic group of speakers and moderators that taps into the experience and insight of ACIC members and their institutions but also features outside experts and […]

Morgan‑Walg, LLC v. Nicollet Island Development Co., et al., No. 17‑1844, 2018 WL 3716369 (Minn. Ct. App. 08/06/18). In an action between former joint venture partners, a Minnesota Court of Appeals panel held that a state district court erred when it granted summary judgment when a genuine issue of material fact existed as to amounts owed […]

American Tooling Center, Inc. v. Travelers Casualty & Surety Co. of America, No. 17‑2014, 2018 WL 3639951 (6th Cir., petition for reh’g or reh’g en banc filed, 07/31/18). In a proceeding relating to the interpretation of an insurance contract, the United States Court of Appeals, Sixth Circuit, reversed a lower court decision that an insurance provider’s “Computer […]

Big A LLC v. Vogel (2018 Mo. App. Lexis 881, 561 S.W.3d 28; 2018 WL 3846233) In a dispute between the guarantor of a series of notes purchased through fraudulent inducement, the Court of Appeals of Missouri (the “Court”) has held that agreements entered into simultaneously should be reviewed in respect of one another. The Court found […]

On January 17, 2019, the United States Court of Appeals for the Fifth Circuit in the Ultra Petroleum matter became the first court of appeals to hold the make-whole amount is unmatured interest and therefore disallowed by the Bankruptcy Code (the Code).  This decision is inapposite to existing precedent of the Second Circuit and other state and […]

November 29, 2018 Benchmark Reform I now turn to the matter of benchmark reform. I am sure everyone here is familiar with the LIBOR, the short-term unsecured interest rate benchmark.  It used to reflect the rate of interest at which money center banks were willing to lend money to each other.  Following unfortunate incidents of […]

Message from ACIC President Happy New Year to all!  It seems that every year goes by quicker than the last. Before 2019 kicks into high gear and my mind wipes out 2018, I wanted to reflect upon 2018 for a moment. Both of our conferences were fantastic.  We had record attendance for the Spring Forum […]