Category: Case Summaries
The long-running litigation spawned by the leveraged buyout of Tribune Company, which closed in December 2007, and the subsequent bankruptcy case commenced on December 8, 2008 has challenged the maxim that “there’s nothing new under the sun” even for this writer with four decades of bankruptcy practice behind him.
Lehman Brothers Announces Settlement to Resolve Massive RMBS Claims; Estimation Hearing Slated for Later This Year
For over eight years, In re Lehman Bros., No. 08-13555-scc (Bankr. S.D.N.Y.), has been one of the most active, complex bankruptcy dockets in the country. A large portion of the remaining contested matters in that case are claims by trustees for residential mortgage backed securities (RMBS), who continue to pursue claims against the Lehman estate for losses caused by toxic mortgages. Recent developments show that Lehman is trying to wrap up many, if not most, of those RMBS claims by the end of this year.
No Easy Way Out: Legal Malpractice Defendants Desiring an Alternative Forum May Be Forced to Litigate in Bankruptcy Court until the Case is “Trial Ready”
Some legal malpractice defendants are content to litigate claims asserted by debtors in the bankruptcy court. But many others, fearing that the debtor’s creditors may view them as a deep-pocketed resource to augment their own recoveries, would prefer to defend malpractice claims in what they view as a more neutral forum. A recent decision by the United States District Court for the Southern District of Florida underscores how difficult it can be for lawyers and law firms in this latter group to move a legal malpractice case out of bankruptcy court, even when it is clear that the bankruptcy court cannot finally adjudicate the dispute.
Recently, in Gupta v. Quincy Medical Center, 858 F.3d 657 (1st Cir. 2017), the U.S. Court of Appeals for the First Circuit clarified the limits of the bankruptcy courts’ subject-matter jurisdiction over civil proceedings. The decision, authored by Judge Lipez and joined by retired Supreme Court Justice David Souter (sitting by designation), provides a thorough analysis of the bankruptcy courts’ jurisdiction in such cases.
Bankruptcy Judge Mary Kay Vyskocil recently granted chapter 15 recognition to a Russian insolvency case over objections that the foreign representative had engaged in wrongdoing. In re Poymanov, 2017 Bankr. LEXIS 2130 (S.D.N.Y. Bankr. July 31, 2017). Judge Vyskocil held that the evidence did not support the allegations of impropriety and that recognition of the Russian case as a foreign main proceeding would not violate US public policy.
An Inconvenient Truth: Litigants’ Access to U.S. Bankruptcy Courts is Subject to Doctrine of Forum Non Conveniens
A recent decision of the United States Bankruptcy Court for the Southern District of New York confirms that despite the increasing frequency and ease with which foreign plaintiffs and defendants can gain access to Bankruptcy Courts in the United States (through Chapter 15 or otherwise), those courts will not hesitate to dismiss a case on the ground of forum non conveniens.
In the Nortel Networks Inc. bankruptcy cases, Judge Kevin Gross rejected a challenge by two bondholders to fees charged by an indenture trustee and its professionals. In re Nortel Networks Inc., 2017 Bankr. LEXIS 674 (Bankr. D. Del. Mar. 8, 2017).
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