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Second Circuit Rules That Lien Is Extinguished Under Chapter 11 Only if Secured Creditor Participates in Case
A hornbook principle of U.S. bankruptcy jurisprudence is that valid liens pass through bankruptcy unaffected. This longstanding tenet, however, is at odds with section 1141(c) of the Bankruptcy Code, which provides that, under certain circumstances, “the property dealt with by [a Chapter 11] plan is free and clear of all claims and interests of creditors,” except as otherwise provided in the plan or the order confirming the plan. Several courts have attempted to reconcile the pass-through principle with the statute by requiring that the creditor “participate in the reorganization” as a prerequisite to the application of section 1141(c).
This judicial gloss clouds the question of whether the terms of a Chapter 11 plan providing for the treatment of secured creditor claims are binding on non-participating secured creditors. The U.S. Court of Appeals for the Second Circuit recently weighed in on this issue as a matter of first impression. In City of Concord, N.H. v. Northern New England Telephone Operations LLC (In re Northern New England Telephone Operations LLC), 2015 BL 248853 (2d Cir. Aug. 4, 2015), the court ruled that a lien is extinguished by a Chapter 11 plan if: 1) the text of the plan does not preserve the lien; 2) the plan is confirmed; 3) the property encumbered by the lien is “dealt with” by the plan; and 4) the secured creditor participated in the bankruptcy case.
Section 1141(c)
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?