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Two recent bankruptcy court decisions have highlighted certain weaknesses regarding bankruptcy remoteness ‘ a concept that typically arises in the context of structured finance and asset securitization transactions. These transactions use special-purpose vehicles and seek to accomplish two primary objectives: first, to isolate a borrower’s assets so as to remove them from risk if the special purpose vehicle becomes insolvent. The second objective is to make the special purpose vehicle bankruptcy remote, meaning that provisions in transactional documents and entity-control documents such as operating agreements are tailored to make it difficult for the borrower to file bankruptcy voluntarily or to collude in an involuntary bankruptcy filing.
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Seventh Circuit Applies Safe Harbor to Private Securities Transaction
By Michael L. Cook
“… [T]he term ‘securities contract’ as used in [Bankruptcy Code] §546(e) unambiguously includes contracts involving privately held securities,” The Seventh Circuit held in Petr v. BMO Harris Bank, N.A.
By Lawrence J. Kotler and Elisa Hyder
In Lafferty v. Off-Spec Solutions, the U.S. Bankruptcy Appellate Panel of the Ninth Circuit held that the discharge exceptions under Section 523(a) do not apply to corporate debtors under Subchapter V of Chapter 11 of the Bankruptcy Code.
Merchant Cash Advances Could Be More Trouble Than They’re Worth
By Joseph Pack and Jessey Krehl
As small-business owners have continued to struggle in an uncertain economy, a growing number have begun the dangerous practice of relying on merchant cash advances — essentially seeking financial shelter in a lion’s den.
Biotech Industry Bankruptcy Case Update: ‘Zymergen’ and ‘Humanigen’
By Edward E. Neiger, Marianna Udem and Joo Hee Park
This Bankruptcy Case Update focuses on the recent biotech industry bankruptcy cases of Zymergen and Humanigen.
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