The Return of the Solvent Debtor Doctrine?
January 29, 2008
The First Circuit recently added its weight to the list of authorities allowing as unsecured claims unreasonable prepayment penalties asserted by oversecured creditors, but, by implication, the court may have added further fuel to the debate regarding the allowability of claims by unsecured creditors for contractual, post-petition attorney fees ...
Distressed Hedge Funds Amidst the Credit Crunch
January 28, 2008
As we begin a new year, many beleaguered hedge funds will reflect on 2007 and how the credit crunch affected Wall Street, corporate borrowers and hedge funds in the long run. Although nobody knows if the end of troubled times is near, we do know that a sustained recovery will take lots of know-how, cooperation and willingness to be more transparent in our dealings with one another and, perhaps, some old-fashioned work.
Equity and Relief from Joint Return Liabilities
December 21, 2007
In the first part of this article, the author discussed the availability of relief for a taxpayer from liability for tax on a joint return that results from his or her spouse's errors or omissions, focusing on the equitable catch-all provided in IRC ' 6015(f). In December 2006, Congress amended the statute explicitly to provide for Tax Court review of IRS determinations not to grant relief under ' 6015(f). Now, the author considers how the Tax Court evaluates these claims in relation to the position of the IRS.
Crystal Ball Required?
December 21, 2007
As experienced Chapter 11 bankruptcy practitioners know, when a company suffers severe financial distress and faces the prospect of imminent bankruptcy, its record-keeping procedures can break down, even if they were previously adequate. To prevent future litigation difficulties from arising in connection with the prosecution of avoidance actions, it is important for a practitioner advising a company heading into or newly in bankruptcy to begin to preserve all electronic data immediately.
The Changing Face of Chapter 11
December 21, 2007
The face of bankruptcies in corporate America has changed multiple times since the reforms of 1978. And it's going to change once more ' probably radically ' over the coming months. This article explains.
The Ephedra Bankruptcy Cases and the Twinlab Global Settlement Model
December 21, 2007
It began a little over four years ago, in late September 2003, with a simple but urgent telephone call from pioneering ephedra plaintiffs' attorney Anne Andrews (of Orange County, CA-based Andrews & Thornton) to one of the authors. The caller asked about the impact of the then-recently filed bankruptcy of TwinLab, an ephedra weight-loss product manufacturer and a significant player in the food and vitamin supplement industry, on that company's products liability insurance policies. Four major ephedra manufacturer bankruptcies later, the situation ended on Sept. 25, 2007, when the United States Bankruptcy Court for the Southern District of California entered an order in the ephedra-related Chapter 11 bankruptcy case of Metabolife International ...
New Business Valuation Standards for Accountants
November 27, 2007
In June 2007, the American Institute of Certified Public Accountants (AICPA) approved new business valuation standards effective for assignments accepted after Jan. 1, 2008 for all member accountants. The AICPA's Statement on Standards for Valuation Services No. 1 (SSVS 1is a solid, well-reasoned set of principles on how to perform and report a valuation analysis. Matrimonial attorneys need to understand the impact of these new AICPA requirements to ensure that their clients benefit from the higher quality of work now expected, and to demand adherence to these standards when exposing poor work done by the casual valuation analyst.
Successful Wind-Down and Exit Management
November 27, 2007
Professionals are often asked to assist in the wind-down and liquidation of a company by the company's legal counsel. The requesting attorney, who may have a history with the company, knows the company is in trouble and may even expect a bankruptcy filing will come relatively soon. This in-depth article describes how to hire a wind-down specialist and what to expect.
Recognition Under Chapter 15
November 27, 2007
The U.S. Bankruptcy Court for the Southern District of New York recently held in two related cases under Chapter 15 of the U.S. Bankruptcy Code involving failed hedge funds that the mere presence of a registered office in the Cayman Islands, without 'pertinent' nontransitory economic activity in the Cayman Islands, was insufficient to recognize Cayman liquidation proceedings as 'main' or 'nonmain' and therefore the court denied relief under Chapter 15. This article offers commentary and practice points relating to Chapter 15 and these cases.
Seller Beware: Recovering the Value of Preferential Transfers of Goods or Equipment
November 27, 2007
Imagine you are an equipment manufacturer. You sell $45 million in goods to a reliable customer on credit, shipping them to a third-party warehouse to be held for the customer to pick up when needed. Months later, unable to pay and sliding toward bankruptcy, the customer returns the unused equipment. The next thing you know, the customer, having filed for bankruptcy, sues you to recover not only the $45 million value of the returned equipment, but also an additional $55 million in cash payments the customer had made.That is exactly the situation Nortel Networks Inc. ('Nortel') recently faced ... Part One of this article discusses some of the many novel legal issues relating to prepetition equipment returns that arose in the Nortel case.
