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and refused to remove; court holds cap is not applicable to collateral damage; case is ambiguous on application to ordinary lease obligations to leave premises broom clean). Compare In re Foamex Intl, Inc., 368 B.R. 383 (Bk. D. Del 2007) (landlord's claim for breach of repair and maintenance covenant was not separate from general termination damages and was within cap). See also In re Connectix Corp., 372 B.R. 488 (Bk. N.D. Cal. 2007) (15% cap refers to 15% of time remaining on lease and not 15% of rent remaining due under lease; court notes split of authority); In re ProCare Automotive Service Solutions, LLC, 359 B.R. 653 (Bk. N.D. Ohio 2007)(cap applies even though landlord had liquidated claim under prepetition judgment); 1500 Mineral Spring Asso., LP v. Gencarelli, 353 B.R. 771 (D.R.I. 2007) (cap applies in surplus case even though it creates windfall for solvent debtor); In re Titus & McConomy, LLP, 2007 WL 2800397 (Bk. W.D. Pa. 2007) (no postpetition interest paid on landlord's claim; general discussion of cap issues).
Under new section 503(b)(9), sellers of goods within 20 days of the petition are entitled to an administrative claim, but the statute is silent on the timing for the payment. In In re Bookbinders' Restaurant, Inc., 2006 WL 3858020 (Bk. E.D. Pa. 2007), the seller argued that it had a right to immediate payment since the obligation was similar to other operating expenses, but the court held that the timing of payment was discretionary and it made no difference that trade creditors were being paid in the ordinary course.
Under new section 511(a), one court permitted a state taxing authority to obtain interest at the state rate of 12%, and rejected the debtor's argument for a reasonable rate. In re D.M. White Const. Co., 366 B.R. 820 (Bk E.D. Term. 2007)
Assume a claim is subject to subordination because of bad conduct of the creditor under section 510(c). Or, assume a claim is subject to disallowance because the creditor received and refused to disgorge an avoidable transfer under section 502(d). Now, assume the creditor in each case transfers the claim to a purchaser. Is the purchaser subject to the defenses? In In re Enron Corporation, 48 BCD P213 (S.D.N.Y. 2007), the bankruptcy court held that the transferee in each case was subject to the defenses on the theory that wrongdoers should not be able to sanitize tainted claims. On appeal, the district court reversed and held that imputation of the defenses was not automatic, but instead, depended on whether the transfer was an assignment (in which case it was subject to defenses) or a sale (in which case it wasn't). The court thus held, in effect, that the defenses were cut off by a sale to a good faith purchaser. Unfortunately, the Court did not deal with the customary situation where the transfer documents say that the claim is "sold, assigned and transferred."
Lenders have been doing well in loan to own cases. See In re Radnor Holdings Corp., 363 B.R. 868 (Bk. D. Del. 2006) (no subordination or recharacterization); In re Repository Technologies, 363 B.R. 868 (Bk N.D. Ill. 2007) (same except for minor recharacterization); In re MarketXT Holdings Corp., 361 B.R. 369 (Bk. S.D.N.Y. 2007) (no claim of breach of fiduciary duty against creditor owning 24% of business since creditor not required
©2009 Jonathan M. Landers
