Eyeing the Pile-up: Subprime Mortgage Industry
by Tim Skillman, Jim Peko, and Joe Cashel
Grant Thornton National Recovery & Reorganization Practice
For the past year or so, regulators and investors have been eyeing the subprime-mortgage industry as spectators on an expressway might a fender bender or a flat tire. Although onlookers usually don’t know what they’re slowing down to see, it’s more often than not a harmless event, rather than a major catastrophe. Nonetheless, the viewing continues, and so do the endless commutes.
Hedge Funds in Bankruptcy Court: Rule 2019 and the Disclosure of Sensitive Claim Information
by Eric B. Fisher
Morgenstern Jacobs & Blue, LLC; New York
Peter D. Morgenstern
Morgenstern Jacobs & Blue, LLC; New York
Confidentiality matters in regards to hedge funds. As increasing numbers of funds compete for investment opportunities, it becomes even more critical for fund managers to keep their holdings and investment strategies close to the vest. Hedge funds that focus on distressed investments have become more active participants in bankruptcy proceedings, but remain loath to disclose sensitive information about the precise nature of their holdings. Thus, one of the side-effects of hedge fund involvement in bankruptcy proceedings has been that Bankruptcy Rule 2019 — a seemingly ministerial rule, mandating certain basic disclosure in specified circumstances — has become a source of hotly-contested litigation.
Settlement Payments in Financial Industry Transactions: How Safe Is the Harbor?
by John J. Monaghan
Holland & Knight LLP; Boston
The limitations of avoidance powers set forth in §546 of the Bankruptcy Code include provisions aimed at providing a safe harbor against avoidance of "settlement payments" made inconnection with various financial industry transactions. Broadly stated, these provisions preclude application of preference, strong-arm or constructively fraudulent transfer theories toavoid "settlement payments" made in connection with securities transactions involving certain enumerated market participants. While many of the reported decisions regarding these transactions emanate from the fraudulent transfer challenges to leveraged buyouts in the 90s, the increasing prevalence of complex financial transactions to fund the operations of even middle-market companies has brought new and increased relevance to the Bankruptcy Code's protection of settlement payments.
Read the full article. (Material from the 2007 Northeast Bankruptcy Conference)