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In Citibank, N.A. v. Brigade Capital Mgmt., LP, 49 F.4th 42 (2d Cir. 2022), the U.S. Court of Appeals for the Second Circuit considered whether, under New York law, lenders to Revlon were entitled to keep an erroneous payment of approximately $500 million transmitted by Citibank, as administrative agent under the credit agreement. Citibank brought an action for restitution against the lenders following their refusal to return the payment. In a 2021 decision, the District Court for the Southern District of New York, relying on the “discharge-for-value” rule set forth in Banque Worms, held that the lenders were not obligated to return the funds. On appeal, the Second Circuit vacated the district court’s decision, holding that the “discharge-for-value” rule did not apply because the lenders were on notice of a mistake and the debt at issue was not presently payable. Click here to learn more.

In Bayside Cap. Inc. v. TPC Group Inc. (In re TPC Group Inc.), Docket Nos. 22-10493 (CTG), 22-50372 (CTG) (Bankr. D. Del. July 6, 2022), minority holders of notes issued by chapter 11 debtor TPC Group Inc. under a 2019 indenture filed an adversary proceeding seeking a declaratory judgment that amendments to the indenture and an intercreditor agreement approved by super-majority holders, which subordinated the liens securing the notes as part of an “up-tiering” transaction, were in violation of the indenture. The Bankruptcy Court for the District of Delaware considered whether, under New York law, the indenture’s no-action clause precluded the lawsuits and whether the indenture permitted the super-majority holders to subordinate the liens. The court held that the no-action clause did not preclude individual holders from filing suit to enforce “sacred rights”, and that the express language of the indenture permitted the super-majority holders to amend the indenture and subordinate the liens securing the notes. Click here to learn more.

In Halperin v. Morgan Stanley Investment Mgmt. (In re Tops Holding II Corp.), Docket Nos. 18-22279, 20-08950, 2022 Bankr. LEXIS 2899 (Bankr. S.D.N.Y. Oct. 12, 2022), the litigation trustee for unsecured creditors of Tops Holding II Corporation in its chapter 11 bankruptcy case brought fraudulent transfer and related claims against private equity investors in and directors of Tops, alleging that their actions drove the grocery store chain into bankruptcy by causing it to pay more than $375 million in dividends to equity owners despite the company’s unfunded pension plan liabilities. The trustee’s complaint sought to avoid and recover the dividends as constructive and intentional fraudulent transfers. It also sought damages against the directors on the basis of unlawful authorization and breach of fiduciary duty in the directors’ approval of the dividends, and damages against certain of the private equity investors for aiding and abetting breach of fiduciary duty. The United States Bankruptcy Court for the Southern District of New York denied the defendants’ motions to dismiss the claims. Click here to learn more.

In FishDish, LLC v. VeroBlue Farms USA, Inc., No. 19‑CV‑3026‑CJW‑KEM, 2022 WL 1093271 (N.D. Iowa Apr. 12, 2022), a Chapter 11 plan was upheld over protest. FishDish, an equity holder, appealed when its objection to the debtor’s Chapter 11 plan was overruled and the plan was confirmed. On appeal, the court denied the appellees’ arguments to dismiss the appeal for lack of standing and on equitable grounds. However, on the merits, the court rejected FishDish’s arguments related to (1) improper denial of discovery requests (2) sufficiency of information including in, and notice and opportunity to object to, the disclosure statement, and (3) errors in confirming the plan. Click here to learn more.

In Peters Broadcast Engineering, Inc. v. 24 Cap., LLC, 40 F.4th 432 (6th Cir. 2022), the Court adopted the forum-state approach to personal jurisdiction in RICO lawsuits. The Court then held, amongst other things, that (1) Peters Broadcast’s allegations did not establish a prima facie case that 24 Capital had sufficient minimum contacts with the State of Ohio to establish personal jurisdiction over 24 Capital in a civil RICO case; (2) evidence submitted by 24 Capital was sufficient to refute a prima facie case of personal jurisdiction in Ohio; and (3) the transfer of the civil RICO case to Indiana was not warranted. Click here to learn more.

In In re Franklin, No. 21‑20657‑DOB, 2022 WL 903735 (Bankr. E.D. Mich. Mar. 28, 2022), Mr. Franklin, a professional boxer, sought to reject as an executory contract a Boxer-Manager Contract with Mr. Haak that required Mr. Franklin to fight in professional bouts arranged by Mr. Haak and from which Mr. Haak would receive a percentage of the fight proceeds. The court determined that the contract could be rejected and that Mr. Franklin could not be required to continue to box at the behest of Mr. Haak. Click here to learn more.

The ACIC is thrilled to have welcomed the following new members during the second half of 2022:

To learn more about these esteemed new colleagues, please click here.