Following decisions in 2021 from both the Delaware District Court and the Southern District of New York rejecting the Ninth Circuit’s controversial Sherwood Partners decision, [1] it appears that rumors of ABC state preference actions’ deaths have been greatly exaggerated. [2] State preference actions are indeed alive and well.
On March 7, 2022, the U.S. Supreme Court in Estate of Omar Fontana v. ACFB Administração Judicial Ltda.-ME, No. 21-828 (U.S. Mar. 7, 2022), denied a petition for review of a decision by the Eleventh Circuit, In re Transbrasil S.A. Linhas Aéreas, 860 Fed. Appx 166 (11th Cir. 2021). The Eleventh Circuit held that an order denying a motion for a protective order to shield parties from discovery subpoenas in a chapter 15 proceeding was interlocutory and thus not final and appealable. [1]
A U.S. judge has appointed a new receiver to oversee the unwinding of assets held by hedge fund firm Platinum Partners, after the first receiver resigned over disagreements with federal securities regulators, Reuters reported on Friday. In a written order on Thursday, U.S. District Judge Dora Irizarry in Brooklyn accepted the resignation of Bart Schwartz, chairman of professional monitoring firm Guidepost Solutions LLC. Schwartz had been appointed receiver after prosecutors in December accused Platinum leaders of running a more than $1 billion fraud. The six men have pleaded not guilty. At the suggestion of the U.S. Securities and Exchange Commission, Irizarry appointed former bankruptcy judge Melanie Cyganowski, now head of law firm Otterbourg's bankruptcy group, as Schwartz's replacement. The agency is pursuing civil claims against the Platinum leaders.
The U.S. Justice Department’s $4 billion fund for victims of Bernard Madoff’s epic Ponzi scheme is getting closer to making its first payout, more than four years after it was set up, Bloomberg News reported on Friday. The administrator of the Madoff Victim Fund, Richard Breeden, said in an update on his website that the Justice Department in early June had approved more than 35,000 petitions claiming total losses of more than $6.5 billion. The first round of checks should go out sometime this year, he said. “Approved petitioners should expect to receive notification of these decisions in the coming weeks,” he said.
The YMCA of Metropolitan Milwaukee announced that its reorganization plan has been confirmed by a U.S. bankruptcy court, WISN.com reported on Friday. The organization voluntarily filed for chapter 11 protection in June 2014, and a reorganization plan, which was submitted on Nov. 30 and amended on Dec. 17. The plan approved by the court on Friday has been approved by all of the YMCA's major creditors.
With an outstanding debt of more than $6.2 million, Albuquerque, N.M.-based Flying Star Cafe filed for chapter 11 protection and closed two of its restaurants on Friday, the Albuquerque Journal reported on Saturday. Underperforming restaurants in Bernalillo and Santa Fe forced the move, said Jean Bernstein, co-owner of the 28-year-old company, and both were shut down on Friday. Flying Star will continue operating as a debtor in possession of its business under a chapter 11, through which it will attempt to negotiate with its creditors to pay off the outstanding debt. Those plans have the support of St. Louis, Mo.-based US Bank, according to court documents. US Bank is the company’s only creditor with claims secured by cash collateral.
Valuations can vary for a number of reasons, including different assumptions and inputs, and sometimes because of the methodology itself, according to a commentary on Credit Slips by Prof. Michelle Harner. But as one of Harner’s students in Corporate Finance recently pointed out, valuations also likely differ because of the legal position (he actually used the term "self-interest") of the party employing the expert and offering the particular valuation into evidence. Harner is a strong proponent of judicial valuation, despite the potential gamesmanship and uncertainty inherent in valuation testimony. She thinks that the process subjects the valuation to greater scrutiny, better protects under-represented parties, and encourages consensual resolutions. The ABI Commission endorsed the continued use of judicial valuation, as well as the ability of judges to appoint valuation experts to perform an independent assessment of the valuation. http://www.creditslips.org/creditslips/2015/01/the-art-of-valuation.html
To read the Commission’s recommendations on valuation, please click here: https://abiworld.app.box.com/s/rca12wvv3qih6phex1yk
For more analysis and perspective on valuation, be sure to attend ABI’s VALCON 2015 conference from Feb. 25-27 in Las Vegas. For more information and to register, please click here: http://www.abi.org/events/valcon15-emerging-valuation-issues-bankruptcy-and-beyond
The official winding down Lehman Brothers Holdings Inc.'s brokerage business said yesterday that he plans to return another $2.2 billion in cash to former employees and other creditors, more than six years after the investment bank's collapse, Dow Jones <em>Daily Bankruptcy Review</em> reported today. <b>James W. Giddens</b>, the court-appointed trustee winding down Lehman's broker-dealer, said in a filing yesterday that he was seeking court approval to make another distribution to unsecured creditors. Combined with the $3.7 billion he has already paid, the brokerage's creditors will have recovered about 27 cents on the dollar.
Nomura Holdings Inc. is balking at following 16 other banks in settling a U.S. regulator’s allegations that Wall Street sold flawed mortgage securities during the housing boom, Bloomberg News reported today. Nomura’s resistance is less about the size of a penalty, which one estimate says won’t exceed $300 million, than its belief that the U.S. unit sued by the Federal Housing Finance Agency did nothing wrong. Nomura also asserts Fannie Mae and Freddie Mac might not suffer losses on the $2 billion of bonds it sold them. Nomura still has time to settle before a trial that’s scheduled to start in March.