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Second Circuit Rules That Lien Is Extinguished Under Chapter 11 Only if Secured Creditor Participates in Case
A hornbook principle of U.S. bankruptcy jurisprudence is that valid liens pass through bankruptcy unaffected. This longstanding tenet, however, is at odds with section 1141(c) of the Bankruptcy Code, which provides that, under certain circumstances, “the property dealt with by [a Chapter 11] plan is free and clear of all claims and interests of creditors,” except as otherwise provided in the plan or the order confirming the plan. Several courts have attempted to reconcile the pass-through principle with the statute by requiring that the creditor “participate in the reorganization” as a prerequisite to the application of section 1141(c).
This judicial gloss clouds the question of whether the terms of a Chapter 11 plan providing for the treatment of secured creditor claims are binding on non-participating secured creditors. The U.S. Court of Appeals for the Second Circuit recently weighed in on this issue as a matter of first impression. In City of Concord, N.H. v. Northern New England Telephone Operations LLC (In re Northern New England Telephone Operations LLC), 2015 BL 248853 (2d Cir. Aug. 4, 2015), the court ruled that a lien is extinguished by a Chapter 11 plan if: 1) the text of the plan does not preserve the lien; 2) the plan is confirmed; 3) the property encumbered by the lien is “dealt with” by the plan; and 4) the secured creditor participated in the bankruptcy case.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.
Compliance Officers: Recent Regulatory Guidance and Enforcement Actions and Mitigating the Risk of Personal Liability
This article explores legal developments over the past year that may impact compliance officer personal liability.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.