By nearly any measure, the chapter 11 cases of Hawker Beechcraft and its affiliates (the debtors) were a significant success. The cases began as a standalone reorganization predicated upon a restructuring support agreement (RSA) among the debtors’ senior lenders and noteholders, which soon thereafter gained the support of the official creditors’ committee.
When making a commercial loan, financial institutions typically require commercial borrowers to provide additional security by obtaining personal guarantees for the repayment of the outstanding debt.
A borrower’s deposit accounts are attractive collateral for lenders. Deposit account funds are essentially cash, and if the lender maintains the account, then the lender can reach the funds without effort. A borrower’s bankruptcy, however, creates a dilemma for deposit account lienholders, and a recent case counsels lenders to obtain adequate protection before turning over deposit account funds to the bankruptcy estate.
In September 2008 as Lehman Brothers Holding Inc. was reaching a state of crisis, it looked like the company might be able to avoid bankruptcy by completing the sale of certain assets to Barclays PLC. The sale would have provided Lehman with much-needed capital and additional time to plan for an orderly wind-down. After days of frenzied negotiations involving Lehman, Barclays and U.S.
Mortgage Electronic Registration Systems Inc. (MERS) is the leading electronic registry for mortgage lenders, and is linked more and more each day to the foreclosure crisis.
I cannot recall how many attorneys, young and old, creditor counsel or debtors I have heard stand up in open court and state with conviction that a debtor must provide “adequate protection” under 11 U.S.C.
The use of nonrecourse carve-out clauses and so-called “springing” or “bad-boy” guarantees in commercial lending is a relatively new concept. Accordingly, case law dealing with their enforceability is not very well developed. The courts that have addressed these issues have uniformly held that such lender safeguards are generally enforceable. This article analyzes these early decisions.
A majority of individuals filing for bankruptcy relief do so in the wake of mounting mortgage debt and collapsing home values. In such circumstances, the ability to “strip off” a wholly unsecured mortgage lien could bring tremendous relief to debtors who are homeowners. Stripping off an unsecured mortgage lien requires it to be treated as an unsecured claim in the bankruptcy case.
The Fifth Circuit Court of Appeals, on October 19, 2010 corrected a bankruptcy court’s calculation of a secured lender group’s superpriority administrative claim more than two years after consummation of the debtors’ chapter 11 reorganization plan. [1] In doing so, the court reconciled the rationale for giving secured lenders “adequate p
