Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Secured Lenders' Right to Full Payment
The U.S. Court of Appeals for the Seventh Circuit held on May 5, 2009, that two secured lenders were fully secured, “entitled to a full recovery” from the debtor (“UAL”) despite the bankruptcy court's improper valuation of the collateral (improved airport terminal space) securing the lenders' underlying $60 million loan. In re United Air Lines, Inc., __ F.3d __, 2009 U.S. App. LEXIS 9648 (7th Cir. 5/5/09) (Easterbrook, Ch. J.). The lower courts had valued the lenders' collateral at $35 million, leaving them with a $25 million unsecured claim. According to the Seventh Circuit, the bankruptcy and district courts had not only ignored critical evidence showing comparable terminal space with a higher value, but the bankruptcy court had also used an improper discount rate when valuing the space rentals over the term of the loan. In the court's words, “[r]eal prices are much more informative than lawyers' talk.” Id. at 13.
Relevance of Ruling
UAL deals with the so-called “absolute priority” rule's requirement that secured creditors be paid in full before junior creditors receive anything under a Chapter 11 reorganization plan. In a recent article, law professor Todd J. Zywicki complained bitterly that a proposed sale procedure in the Chrysler reorganization threatened the rule. See “Chrysler and the Rule of Law,” Wall Street Journal, May 13, 2009. In his article, the professor made three major points:
- Although the absolute priority rule requires secured creditors to receive first payment priority, in Chrysler they have “been browbeaten by an American president into accepting only 30 cents on the dollar of their claims.” Junior creditors, on the other hand, “will get about fifty cents on the dollar.”
- A “linchpin of bankruptcy law,” the absolute priority rule provides a “procedural mechanism for the efficient resolution of financial distress” because it preserves “the substantive property and contract rights of creditors.”
- Disregarding the absolute priority rule upsets the process by reconfiguring the redistribution of the bankruptcy estate, subjugating the rights of secured creditors to those of junior creditors.
Putting aside the hyperbole, how secured creditors fare in reorganization cases has regularly been the subject of intense litigation.
Yachts, Jets, Horses & Hooch: Specialized Commercial Leasing Models
Defining commercial real estate asset class is essentially a property explaining how it identifies — not necessarily what its original intention was or what others think it ought to be. This article discusses, from a general issue-spot and contextual analysis perspective, how lawyers ought to think about specialized leasing formats and the regulatory backdrops that may inform what the documentation needs to contain for compliance purposes.
Hyperlinked Documents: The Latest e-Discovery Challenge
As courts and discovery experts debate whether hyperlinked content should be treated the same as traditional attachments, legal practitioners are grappling with the technical and legal complexities of collecting, analyzing and reviewing these documents in real-world cases.
Identifying Your Practice's Differentiator
How to Convey Your Merits In a Way That Earns Trust, Clients and Distinctions Just as no two individuals have the exact same face, no two lawyers practice in their respective fields or serve clients in the exact same way. Think of this as a "Unique Value Proposition." Internal consideration about what you uniquely bring to your clients, colleagues, firm and industry can provide untold benefits for your law practice.
Risks and Ad Fraud Protection In Digital Advertising
The ever-evolving digital marketing landscape, coupled with the industry-wide adoption of programmatic advertising, poses a significant threat to the effectiveness and integrity of digital advertising campaigns. This article explores various risks to digital advertising from pixel stuffing and ad stacking to domain spoofing and bots. It will also explore what should be done to ensure ad fraud protection and improve effectiveness.
Turning Business Development Plans Into Reality
This article offers practical insights and best practices to navigate the path from roadmap to rainmaking, ensuring your business development efforts are not just sporadic bursts of activity, but an integrated part of your daily success.