I’ll admit it. One of my favorite words is “allonge”. It breaks up my otherwise decumbent register with something exotic. Legally, it’s a way to assign a promissory note to another party who then has the rights to assert the promissory note against the obligors. The last post discussed the importance of compliance
Two Lawsuits Diverge and I take the Defendant Less Liable
To paraphrase Count Ciano, Success has many fathers and failure has many targets. You may recall a while back I wrote about how a loan to old General Motors (worth $1.5 billion) was accidentally rendered un-secured. When GM entered bankruptcy, the loan was ultimately determined to be unsecured and lenders (presumably) lost billions. As
Beware the Sleeping Executory Contract
Sometimes a buyer is upset because he received less than he paid for. On the other hand, sometimes the buyer is upset because he received way more than he paid for. In a recent Texas Supreme Court decision, the buyer of contracts out of bankruptcy realized too late that it had purchased tens of millions
The Lender Holds the Bag When the Appraisal is Wrong
The Bankruptcy Code permits a bankruptcy trustee to “surcharge” a lender’s collateral when the cost will benefit the lender and there is also benefit to the bankruptcy estate. The friction arises when the collateral is worth less than the lender’s secured claim plus the surcharged expenses. In short, who is left holding the bag when
The Only Thing Worse Than a Claim in Bankruptcy is Claim Subordination
Claim subordination is the opposite of alchemy. In most bankruptcy cases, creditors might look for ways to improve their treatment. Claim subordination in the bankruptcy code provides a mechanism to force a creditor to receive worse treatment (relative to other non-subordinated claims which is, admittedly, not that great of treatment).
In bankruptcy, there are a
PWC Escapes MF Global, Inc. Class Action Suit Claiming In Pari Delicto
I have been told that in a traffic jam ambulance drivers are taught to move to the first opening available in traffic and figure out where to go after that. Sometimes legal strategy takes that same philosophy. In a recent 2nd Circuit Case, PriceWaterhouseCoopers, LLP (“PwC”) asserted in pari delicto to avoid immediate liability
Make Whole Provisions: the Need to Aggressively Walk Back Aggressive Collection Provisions
Unexpected things happen in bankruptcy. Some debts can be restructured, some debts can be reduced and some debts the debtor is just stuck with. In contrast, outside of the bankruptcy ecosystem, economic interests are treated normally. Because of the difference, a creditor’s activities for recovery in bankruptcy will, at times, seem at odds with
7th Circuit Holds Construction Lender “Caused” M&M Liens when it Cut Off Funding, Can’t Seek Coverage Under Title Policy
Knowing when to cut your losses and walk a deal is a difficult skill to master. In the construction loan context it is particularly difficult because a half completed building lacks the intended value anticipated on the loan. On the other hand, cutting off disbursements causes a whole other set of risks including mechanic and
The Plaintiffs Suing the Lender May Not Exist At the Time the Loan Documents Are Signed
It is often surprising to me how often people are unaware of the fairly high risk of being sued in connection with a chapter 11 bankruptcy case when there is money in the case. Many times, non-debtor parties’ falsely comfort themselves with the belief they will not be sued because existing management wouldn’t want to
Bankrupt Bitcoin Exchange Mt. Gox begins to Pay Back Account Holders in Bitcoin
Bitcoin is one of several crypto-currencies which are exchanged generally outside of sovereign control and all electronically. In early 2014, a Bitcoin exchange named Mt. Gox filed bankruptcy in Tokyo and subsequently sought additional protection in the US by filing a chapter 15 bankruptcy petition. Just recently, the bankruptcy trustee in Tokyo has announced he