CR&B Alert - September 2010
Mondaq Business Briefing › United States Law Articles in English (2010)
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CR&B Alert - September 2010
COMMERCIAL RESTRUCTURING & BANKRUPTCY NEWS – SEPTEMBER 2010, ISSUE 3
Contents Sellers Beware—Unauthorized Payments from 'Cash Collateral' Will be Avoided The Third Circuit Expands the Substantial-Performance Test to Determine if a Trademark License Contract is Executory Court Breaks from Majority Rule, Granting Retirees Post-Petition Rights Greater than Pre-Petition Rights Landlords Successful in Obtaining Stub Rent as an Administrative Expense Under Section 503 Delaware Bankruptcy Court Finds Appointment of Examiner Not Required Every Time the Statutory Debt Threshold is Exceeded The Third Circuit Overrules a Long-Standing Case, Changing the Ability of Personal Injury Plaintiffs to Bring Suit Against Debtors Defense of Imputation of an Agent's Bad Conduct to its Principal Clarified in Pennsylvania; Independent Auditor at Risk for $1 Billion in Damages Sanctions Awarded Under the Bankruptcy Court's 'Inherent Authority' Texas District Court Affirms the Contractual Default Interest Rate Where the Debtor is Solvent An LLC Member/Manager is an 'Insider,' so that Payments Are Preferential Transfers Subject to Avoidance Up to One Year Prior to Bankruptcy Filing Broader Economic Woes May Have Played a Part in the Court's Decision to Dismiss Allegations of Lender Overreaching Risk Losing Your First Priority Lien if You Provide Superfluous Information in the UCC Financing Statement Landlord's Corner Counsel's Corner SELLERS BEWARE—UNAUTHORIZED PAYMENTS FROM 'CASH COLLATERAL' WILL BE AVOIDED Christopher O. Rivas Associate Los Angeles Marathon Petroleum Co., LLC v. Cohen (In re DELCO Oil, Inc.), 599 F.3d 1255 (11th Cir. March 16, 2010) CASE SNAPSHOT Suppliers to chapter 11 debtors-in-possession should always ensure that they are not being paid from the debtor's "cash collateral" without court approval. Marathon Petroleum Company supplied products to debtor Delco Oil in the ordinary course of its business during the bankruptcy case, but was forced to return all of the post-petition payments it received from Delco, pursuant to section 549 of the Bankruptcy Code. Marathon was required to return these payments because they were deemed part of the cash collateral that was secured by Delco's pre-petition creditor, CapitalSource Finance. Marathon provided valuable goods to Delco in exchange for payment, and was unaware that Delco was using cash collateral to make payment. Unfortunately for Marathon, section 549 strictly mandates the return of unauthorized post-petition payments. Further, UCC 9-332(b) (which outside of bankruptcy cases ordinarily protects innocent transferees of deposit accounts from claims by prior lien claimants) did not apply because the issue was not one of lien priority, but of unauthorized transfers. FACTUAL BACKGROUND On Octob...See the full content of this document
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