Source: https://www.abi.org/membership/committees/commercial-fraud
Timestamp: 2019-04-24 13:50:38+00:00

Document:
Penn State Law; University Park, Pa.
Lees Inns of America (LIA) was a public company that built and operated hotels. Lester Lee (Lester) and his brother William each owned 25 percent of LIA. In 1994, LIA went private and Lester became the majority shareholder and chairman of the board. The balance of shares were held by a trust (the Trust) created by William with his two sons as co-trustees.
An insurance policy covering directors and officers of a company can provide a valuable source of restitution for a bankruptcy estate and its creditors who have been wronged by actionable negligence and/or failures to act by corporate officers and directors. An informed plaintiff will read the applicable policy (prior to instituting suit if possible) closely, as such policies uniformly contain various exclusions to coverage. When a claim against a director or officer (D&O) falls under a policy exclusion, the policy’s coverage might not apply to that claim. The insurer may issue a “reservation of rights” letter to its insured detailing those claims that the insurer has decided are not covered by the policy.
Bienert, Miller & Katzman, PLC; San Clemente, Calif.
Are Bankruptcy Courts Loosening Standards for Student Loan Discharge?
Tripp Scott, PA; Fort Lauderdale, Fla.
Student loan debt has now grown to over $1.5 trillion. Despite a relatively strong economy, more than 8 million borrowers are delinquent or are in default under their loans. Of particular concern to lenders is that these figures will only worsen if economists’ predictions for a slowing economy ring true.
First enacted during the Great Depression, the Perishable Agricultural Commodities Act (PACA) in part sought to protect the suppliers of fruits and vegetables who had been left unpaid when purchasers went bankrupt.
Law Offices of Douglas T. Tabachnik, P.C.; Freehold, N.J.
A struggling real estate developer decided to do some asset-planning and transferred his partial interest in two properties to his wife as tenancy-by-the-entirety. Three years later, he filed for chapter 7 bankruptcy and claimed the two properties as exempt under 11 U.S.C.
At what point does the policy of bankruptcy, a discharge that strongly favors the honest-but-unfortunate individual debtor, yield to creditor protections from fraudulent debtor behavior? This is a question the Supreme Court recently considered in its decision in Lamar, Archer & Cofrin LLP v. Appling.
The Bernie Madoff investment scandal unleashed a slew of lawsuits, and at first glance, SPV OSUS Ltd. v. UBS AG may seem like just another drop in the bucket. However, this case is notable for its expression of the Second Circuit’s rather extraordinary view of “related to” bankruptcy jurisdiction.
Committee Call: Janvey v. Golf Channel, Inc.
In Janvey v. Golf Channel, Inc., No. 13-11305 (5th Cir. Aug. 22, 2016), arising from the SEC enforcement action against Stanford International Bank, Ltd., pending in the U.S. District Court for the N.D. Tex., the U.S. Court of Appeals for the Fifth Circuit addressed the issue of whether trade creditors who fully perform in the ordinary course at market rates provide reasonably equivalent value to a Ponzi scheme, under the Bankruptcy Code and fraudulent transfer law in Texas (and beyond).
The topic of the most recent Commercial Fraud Committee call, discussed the Uniform Voidable Transactions Act (UVTA), formerly named the Uniform Fraudulent Transfer Act (UFTA), which was amended (and retitled) in 2014 for the first time since its creation in 1984. According to the Uniform Law Commission, the amended Act, which strengthens creditor protections by providing remedies for certain transactions by a debtor that are unfair to the debtor’s creditors, addresses a small number of narrowly-defined issues and is not a comprehensive revision of the Act.
Guest speaker, James Lodoen, Esq., a partner at Linquist & Vennum, PLLP in Minneapolis, discusses Finn v. Alliance Bank (S. Ct. Minn. 2015), Kelley v. Opportunity Finance, LLC, et al. (In re Petters Company, Inc., et al.) (Bankr. D. Minn. May 31, 2016), and the Ponzi-scheme presumption.
The Commission recommended that section 550 be amended to permit the trustee to name an alleged subsequent transferee as a defendant in the original complaint to avoid any transfer under Bankruptcy Code sections 544, 545, 547, 548, 549, or 553(b), and to recover such property under section 550, rather than filing an avoidance action prior to filing a recovery action, as the Code currently requires.
The Chapter 11 Commission Report recommended that the burden of proof for appointing a Chapter 11 Trustee under 1104(a) be changed from clear and convincing evidence to a preponderance of the evidence. The Commissioners determined that the existing more stringent standard has a chilling effect on parties-in-interest seeking the appointment of a Trustee, that the benefits of having a Trustee in appropriate cases outweigh the risks of abuse and unnecessary distractions that a lower standard could bring, and that adopting a preponderance of the evidence standard would resolve a split among the courts on this issue.
During this call, Geoffrey L. Berman discussed the ABI’s Commission Report to Study the Reform of Chapter 11, particularly its recommendations related to In Pari Delicto. In addition, the committee’s leadership discussed the various projects and presentations the committee is working on in the coming months.
Mr. Walter F. McArdle, Esq.
Mr. Stephen V. Falanga, Esq.
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