LBOs, fraudulent transfers revisited

Article Abstract:

In Mellon Bank N.A. v. Metro Communications Inc T/A Metrosports the 3rd U.S. Circuit Court of Appeals ruled that a leveraged buyout could not be considered a fraudulent transfer if the target company received indirect economic benefits of equivalent value. This is the first time that courts have seriously considered indirect benefits in assessing fraudulent transfer law codified in Sec. 548 of the Bankruptcy Code. That provision states that a transfer (buyout) can be avoided as fraudulent if it results in the target company being left insolvent or if it does not receive equivalent value for its assets.

Investment banks, Leveraged buyouts, Bankruptcy

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After MCorp, decisions favor regulators

Article Abstract:

The US Supreme Court's decision in Federal Reserve v MCorp Financial Inc has strengthened the positions of regulators relative to their Chapter 11 holding companies and non-bank subsidiary creditors. Several decisions following Federal Reserve v MCorp have used the provisions of FIRREA to override injunction provisions of the Bankruptcy Code. The conflict arises from the fundamental fact that while FIRREA purports to protect depositors' capital base, the Bankruptcy Code wants to achieve equitable distribution of assets to creditors.

Laws, regulations and rules, Bankruptcy reorganizations, Bankruptcy reorganization, Bankruptcy trustees

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Four recent decisions in the Orange County case attempt to balance state sovereignty interests and the goals of Chapter 9

Article Abstract:

Four federal court decisions in cases relating to the bankruptcy filing by Orange County, California, could set important precedents in future Chapter 9 filings. Each concerned the extent of a federal bankruptcy court's authority in light of the 10th Amendment's limitations. One dealt with modifications of collective bargaining agreements, another with the court's ability to protect secured creditors, a third with limits imposed by sec 904 of Chapter 9, and the last with what qualifies as a municipality for Chapter 9 eligibility.

Public Finance Activities, Public Administration, Bankruptcy Law, Other Justice, Public Order, and Safety Activities, County Government, Municipal Govt Liabilities & Debt, United States, California, Local finance, Orange County, California, Municipal bankruptcy

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