Latest 3 Cases This Week: Lehman Brothers Special Financing Inc. v. Bank of America N.A. (2d Cir.), Dooley v. Luxfer MEL Technologies (8th Cir.), ...

#MeToo and What Men and Women Are Willing to Say and Do

SHERRY F. COLB

Cornell Law professor Sherry F. Colb explores why people have such strong feelings about the #MeToo movement (whether they are advocates or opponents) and suggests that both sides rest their positions on contested empirical assumptions about the behavior of men and women. Colb argues that what we believe to be true of men and women generally contributes to our conclusions about the #MeToo movement and our perceptions about how best to handle the accusations of those who come forward.

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Lehman Brothers Special Financing Inc. v. Bank of America N.A.

Court: US Court of Appeals for the Second Circuit

Docket: 18-1079

Opinion Date: August 11, 2020

Judge: Per Curiam

Areas of Law: Banking, Bankruptcy

The Second Circuit affirmed the district court's judgment affirming the bankruptcy court's grant of defendants' motion to dismiss in an action arising out of the Chapter 11 bankruptcy of Lehman Brothers Holdings Inc. The bankruptcy court held that, in the context of synthetic collateralized debt obligations, certain "Priority Provisions" that subordinated LBSF's payment priority to claims of the Noteholder defendants are enforceable by virtue of section 560 of the Bankruptcy Code, which exempts "swap agreements" from the Code's prohibition of "ipso facto clauses." Like the district court, the court held that, even if the Priority Provisions were ipso facto clauses, their enforcement was nevertheless permissible under the section 560 safe harbor. The court explained that the Priority Provisions are incorporated by reference into the swap agreements and thus, for the purposes of section 560, are considered to be part of a swap agreement; the contractual right to liquidate included distributions made pursuant to Noteholder priority; the Trustees exercised a contractual right to effect liquidation when they distributed the proceeds of the sold Collateral; and, in doing so, the Trustees exercised the rights of a swap participant. Because the Priority of Payments clauses are enforceable under the Code, the court held that LBSF's state-law claims also fail. Finally, the district court and bankruptcy court correctly concluded that LBSF is not entitled to declaratory relief.

Dooley v. Luxfer MEL Technologies

Court: US Court of Appeals for the Eighth Circuit

Docket: 20-6005

Opinion Date: August 7, 2020

Judge: Schermer

Areas of Law: Bankruptcy

Luxfer appealed the bankruptcy court's decision that payments to Luxfer were not protected by the ordinary course of business defense to a preference action. The Bankruptcy Appellate Panel held that it cannot make the determination of whether the bankruptcy court properly determined that preference payments did not qualify for the ordinary course of business defense without additional explanation from the bankruptcy court. Therefore, the panel remanded this matter to the bankruptcy court to set forth the method by which it adopted 47 days as the ordinary course cut-off or, alternatively, determine which preferential transfers were made in the ordinary course. Furthermore, the court held that the adversary complaint seeks not only avoidance of preferential transfers under Bankruptcy Code section 547, but also recovery under Bankruptcy Code section 550. In this case, the bankruptcy court did not address recovery under section 550, and the panel remanded for the bankruptcy court to do so.

Elliott v. Pacific Western Bank

Court: US Court of Appeals for the Ninth Circuit

Docket: 18-17421

Opinion Date: August 12, 2020

Judge: Paez

Areas of Law: Bankruptcy

The Ninth Circuit affirmed the district court's judgment affirming the bankruptcy court's dismissal of a chapter 7 debtor's adversary proceeding seeking to exempt retirement funds from the bankruptcy estate. In dismissing the adversary complaint for failure to state a claim, the bankruptcy court held that debtor could not reclaim his retirement funds because he filed the bankruptcy petition after the execution lien had been satisfied. The panel held that debtor failed to state a claim under 11 U.S.C. 522(h), which allows a debtor to step into the role of the bankruptcy trustee and avoid certain transfers of exempt property made before the filing of the bankruptcy petition. The panel also held that, because the judicial lien was satisfied prior to the petition date, it was not voidable under section 522(f). Therefore, because it was not voidable, debtor could not succeed on his separate section 522(f) claim nor establish that the transfer of his IRA funds was a preferential transfer under section 547. Having failed to allege the elements of a section 547 preferential transfer, the panel held that the bankruptcy court correctly concluded that debtor failed to state a claim under section 522(h).