Bankruptcy update: repos & safe harbor *

USA - March 19 2013
Few courts have construed the meaning of "repurchase agreement" as used in the Bankruptcy Code, so the recent HomeBanc case out of the United States…

Co-authors: Karen Gelernt, Jonathan T. Edwards.

---

TOUSA redux: the Eleventh Circuit Court of Appeals affirms bankruptcy court’s avoidance of constructively fraudulent transfers and reverses the district court *

USA - May 18 2012
The outcome of the TOUSA appeal has been much anticipated and closely watched by the lending community, their counsel and advisors, and legal scholars.

Co-authors: Jonathan T. Edwards, William S. Sugden, John C. Weitnauer (Kit), Jason H. Watson, Dennis J. Connolly.

---

Delaware Bankruptcy Court dismisses single-asset real estate Mezz debtor’s bankruptcy case for bad faith *

USA - January 26 2012
On December 22, 2011, the United States Bankruptcy Court for the District of Delaware in In re JER/Jameson Mezz Borrower II LLC dismissed with prejudice a mezzanine borrower’s bankruptcy case for bad faith under Section 1112(b) of the Bankruptcy Code.

Co-authors: Jonathan T. Edwards, Jason H. Watson.

---

Court holds that a bankruptcy termination provision that subordinates an in-the-money debtor’s right to a distribution may be an unenforceable ipso facto provision *

USA - June 16 2011
In Lehman Brothers Special Financing, Inc. v. Ballyrock ABS CDO 2007-1 Limited (In re Lehman Brothers Holdings, Inc.), Adv. P. No. 09-01032 (JMP) (Bankr. S.D.N.Y. May 12, 2011) [hereinafter “Ballyrock”], the United States Bankruptcy Court for the Southern District of New York held that a contractual provision that subordinates the priority of a termination payment owing under a credit default swap (CDS) to a debtor in bankruptcy, and which caps the amount of the termination payment, may be an unenforceable ipso facto clause under section 541(c)(1)(B).

Co-authors: Jonathan T. Edwards, William S. Sugden, John C. Weitnauer (Kit), Jason H. Watson, Dennis J. Connolly.

---

Bankruptcy court holds that section 546(e) safe harbor does not apply to “settlement payments” made in a small, private leveraged buyout that poses no systemic risk to the securities market *

USA - May 11 2011
In Geltzer v. Mooney (In re MacMenamin’s Grill, Ltd.), Adv. Pro. No. 09-8266 (Bankr. S.D.N.Y. April 21, 2011), the United States Bankruptcy Court for the Southern District of New York held that the safe harbor in section 546(e) of the Bankruptcy Code does not apply to a small, private leveraged buyout (LBO) transaction that posed no systemic risk to the stability of the financial markets.

Co-authors: Jonathan T. Edwards, Jason H. Watson.

---