Happy Summer, and welcome to the May/June 2023 edition of the ACIC Private Notes Newsletter. In this jam-packed edition, you’ll find:

• A Save-the-Date for the 2023 Fall Meeting;
• A summary of the 2023 Spring Investment Forum, by Andy Christianson (Reinhart Law);
• The latest ACIC Committee Reports, compiled by Tyler Margolis (ArentFox Schiff);
• Recent case law summaries from the following regions:
• New England (Kevin Braun, Morgan Lewis);
• Southern (Jeff Dutson, King & Spalding);
• Southwest (Clint Culpepper, Baker Botts); and
• Rocky Mountain and Western (David Simonds, Hogan Lovells); and
• An in-depth look at liability management exercises in the U.S. and Europe, prepared by Tom Bannister, Emma Butler, Lauren Pflueger, Barry Russell and Emma Simmonds (Akin).

Save the Date: 2023 Fall Annual Meeting 

This year’s Fall Annual Meeting and Education Conference will take place on October 19^th and October 20^th at the Westin New York Grand Central Hotel in New York City. Registration will open mid-July! Make sure to reserve your room at the hotel. The cut-off date is September 26^th or when the block is full. Book now to get the discounted rate. The room block sells out quickly. More details and a link to the room block can be found here!

Spring Investment Forum 2023 Recap

We hope you were able to join us for this year’s annual Spring Investment Forum, which was held in Chicago on April 27^th and 28^th. Click here for a recap of all the exciting panels and events.  

Spring 2023 Committee Reports

Our committees have been hard at work this year. Click here to learn more about what each group does and what they’ve been up to in recent months! And if you haven’t already, we hope you’ll consider joining a committee – there are options to fit every interest. Please feel free to reach out to any of the chairs with questions.

New England Region

In Berkshire Bank v. Kelly, a security interest did not attach to a pledged investment account when collateral description included reference to the grantor’s property “in the possession of, or subject to the control of, Lender” and the depositary bank never signed the control agreement. For more information about this case, click here.

In Auctus Fund, LLC v. Drone Guarder, Inc., convertible notes with default interest exceeding the Massachusetts statutory maximum violated the Massachusetts Usury Act, because they were not registered with the Massachusetts Attorney General’s office. Click here to find out the outcome and learn more.

In In re Latex Foam International, LLC, et al., Debtors Official Committee of Unsecured Creditors of Latex Foam International, LLC et al., Appellant v. Entrepreneur Growth Capital, Appellee, the District Court affirmed the Bankruptcy Court’s order awarding an oversecured creditor payment of default interest. For more about the facts of the case and the standards used by the court, click here.

Southern Region

In ArrowPointe Federal Credit Union v Bailey, due to lender’s failure to obtain title examination to ascertain existence of intervening liens, the equitable subrogation exception to South Carolina’s race-notice statute was inapplicable and lender did not retain its senior lien priority when it refinanced its own lien. For more information about this case, click here.

In Poly-Med, Inc. v. Novus Scientific Pte. Ltd., the question of whether separate breaches of contract—as South Carolina law does not recognize the continuing breach theory—trigger the same statute of limitations depends on the parties’ contractual relationship and intent, which is to be determined through the court’s factual analysis of the agreement’s language and context. Click here to find out the outcome and learn more.

In Sadler v. Players Recreation Grp., LLC member had no duty to work at the LLC full-time or to contribute to the LLC’s debt where there was no written LLC agreement to do so under Alabama law. For more about the facts of the case and the standards used by the court, click here.

Southwestern Region

In Wilson v. Cap. Partners Fin. Grp. USA, Inc., a debtor challenged a sale of collateral due to lack of adequate notice. The case was determined based on five specific requirements set forth in Section 9.613 of the Texas Business and Commerce Code. Click here to find out the outcome and learn more.

Rocky Mountain and Western Regions

In In re Mariner Health Central, the United States Bankruptcy Court for the Northern District of California denied the debtors’ motion to extend the automatic stay to certain non-debtor affiliates or to enjoin litigation against such non-debtor affiliates, finding that the debtors had not satisfied the high standard required to extend the automatic stay to its affiliates or grant a preliminary injunction to halt the litigation against its affiliates. For more about the facts of the case and the standards used by the bankruptcy court, click here.  

In In re Priddis, the Ninth Circuit Court of Appeals held that an involuntary Chapter 7 bankruptcy petition filed by 14 copyright holders who had obtained an infringement judgment against the debtor was permitted under Section 303(b)(1) of the Bankruptcy Code. Even though the 14 plaintiffs shared a single $3 million judgment, each plaintiff held a separate claim and therefore met the requirement that three or more creditors each hold noncontingent, undisputed claims in the amount of at least $16,750. For more information about this case, click here. 

In In re TBH19, the Ninth Circuit Bankruptcy Appellate Panel (BAP) decided whether a claim should have been disallowed under section 502(e)(1)(B) of the Bankruptcy Code as contingent claim for reimbursement or contribution and if the settlement of that claim should have been approved by the bankruptcy court under Bankruptcy Rule of Procedure 9019. The court held that the claim was not subject to disallowance and approval by the bankruptcy court under Bankruptcy Rule 9019 was proper. A detailed summary of the facts and the BAP’s ruling can be found here. 

International Developments – Liability Management Exercises: A Transatlantic Perspective

This in-depth article, prepared by Tom Bannister, Emma Butler, Lauren Pflueger, Barry Russell and Emma Simmonds (Akin), reflects on liability management exercises (LMEs), their general use and how they may interact with (or be impactful in advance of) broader restructuring processes. The authors also trace the rise in popularity of LMEs in the U.S. and reflect on why these transactions are not yet market standard in Europe. Legal and cultural reasons, together with the availability of relatively light-touch European restructuring processes, contribute to the limited practical application of LME transactions in Europe when compared to the U.S., and it remains to be seen whether their future use in Europe may be on a more “exceptional” than “market standard” basis. The full article can be read here.