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Circuits are split on the issue of whether bankruptcy courts can confirm plans containing non-consensual third-party releases. Historically, the split involved the application of Bankruptcy Code § 105 or 524. Recently, however, a few secured creditors have relied on Stern v. Marshall,[1] in which the Supreme Court held that 28 U.S.C.
The opinion issued by the U.S. Court of Appeals for the Ninth Circuit in DZ Bank Ag Deutsche Zentral-Genossenschaftbank, Frankfurt Am Main v. Meyer[1] is noteworthy to secured creditors in the context of the extent of the judgment to which they may be entitled as a consequence of the commission of actual fraud.
Following a chapter 11 case, lenders face significant risks associated with debtor-in-possession (DIP) loans or cash-collateral orders that provide for automatically perfected liens encumbering a debtor’s assets. Section 364(d)(1) authorizes a debtor to obtain financing secured by a lien on estate property, and bankruptcy courts regularly grant creditors automatically perfected liens on a debtor’s assets without the need to perfect such liens through the applicable state law system.
On Jan. 15, 2016, the U.S. Bankruptcy Court for the Middle District of Alabama decided In re Moorer, 15-30422-WRS, 2016 WL 199061 (Bankr. M.D. Ala. Jan. 15, 2016), wherein the court allowed the debtor to bifurcate a loan and treat the value of the property as the secured claim,
