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Mid-Atlantic Region
In In re Golden Seahorse LLC, secured lenders of Golden Seahorse LLC asked the Southern District of New York Bankruptcy Court to consider whether a debtor must pay default rate interest and fees to reinstate a defaulted loan under a chapter 11 reorganization plan. The court held that when the debtor’s default arises from its failure to perform monetary obligations, the debtor must pay default interest and fees to the extent provided by its agreement and permitted by non-bankruptcy law to cure and reinstate its defaulted debt under Section 1124(2) of the Bankruptcy Code. For a summary of the case, click here.
In Kirschner v. JP Morgan Chase Bank, N.A., the U.S. Court of Appeals for the Second Circuit examined whether the District Court for the Southern District of New York had subject matter jurisdiction over an action arising from a syndicated loan transaction under the Edge Act, 12 U.S.C. Section 632, and also whether the District Court erroneously dismissed the Plaintiff’s state law claims because the Plaintiff failed to plausibly suggest that syndicated loan notes are securities. The Second Circuit determined that the District Court had subject matter jurisdiction under the Edge Act because the action arose out of transactions involving foreign banking. In considering whether the syndicated term loan was a security, the Second Circuit applied the four-factor “family resemblance” test as set forth in Reves v. Ernst & Young, 494 U.S. 56 (1990), and determined that the notes were not “securities”; therefore, the Second Circuit concluded that the District Court’s dismissal of the Plaintiff’s state law securities claims was not erroneous. For a summary of this highly anticipated case, click here.
Mid-West Region
In The Alliance Group, Inc. v. NGC Group, Inc., in a dispute between The Alliance Group, Inc. and NGC Group, Inc. and its owner, the Nebraska Court of Appeals affirmed the district court’s ruling that the owner’s oral promise to reimburse Alliance was not barred by Nebraska’s statute of frauds and that NGC had breached that promise. For a summary of the case, click here.
In Cassidy v. Signature Bank, the Appellate Court of Illinois affirmed the circuit court’s ruling and found Signature Bank in breach of contract when the bank applied individual retirement account (IRA) funds to set off the debt that Cassidy Brothers, Inc. owed. For a summary of the case, click here.
In First National Bank v. Inghram, the Supreme Court of South Dakota held that the circuit court abused its discretion in certifying its order as a final judgment because the Inghrams’ fraud counterclaim was still pending at the time of the certification and the court failed to identify special circumstances to justify certifying its order as a final judgment. For a summary of the case, click here.
In CREDITBOX.COM, LLC v. Weathers, the Court of Appeals of Wisconsin held that (1) a short-term consumer lender’s accelerating debt and commencing proceedings against the debtor without giving the statutory 15-day notice violated the obligation of good faith, and (2) all counterclaims made by a debtor are “in response to” the creditor’s action to enforce its rights against the debtor under the Wisconsin Consumer Act. For a summary of the case, click here.
International Developments – Canada
In South West Terminal Ltd. v Achter Land & Cattle Ltd., the Saskatchewan Court of Kings Bench found that the use of a “thumbs up” emoji (“👍”) signified acceptance of a contract for the purchase and sale of flax. For a summary of the case, click here.
In Kidd (Re), the Alberta Court of Queens’s Bench found that the interim discharge of the Trustee in a bankruptcy case restored the Crown’s rights to use its set-off powers to set off post-bankruptcy tax refund credits against pre-bankruptcy tax debt proved by the Crown. For a summary of the case, click here.
International Developments - UK
In the summer of 2020, the Corporate Insolvency and Governance Act 2020 introduced some of the most significant changes to the UK’s corporate insolvency and restructuring regime in nearly 20 years. Central to these reforms was the restructuring plan. Intended to be a flexible procedure, the restructuring plan was designed (in part) to address a perceived deficiency of the English scheme of arrangement – the lack of a cross-class cram down mechanism. Now, more than three and a half years after the restructuring plan entered the English restructuring toolkit, a number of companies have used it to implement restructurings, and it is now an established and viable process. It is an opportune time to reflect on the lessons learned from the cases that came before the Court in 2023, and consider what might be to come in 2024. Click here to read more.
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