Eighth Circuit protects seller's reclamation rights in chapter 11 despite floating lien on buyer's inventory: the plan drafting lesson of 'Pester Refining.'
Article Abstract:
The ruling of the US Court of Appeals for the 8th Circuit, in In re Pester Refining Co, allowed Ethyl Corp's reclamation claim to stand despite there being other secured sellers. However, Ethyl Corp was denied the postjudgment interest from the date of confirmation of the reorganization plan. The process in this case is a warning that the formulation of a chapter 11 reorganization plan can affect a seller's right to repossess when there is a secured creditor with a floating lien on the debtor's inventory.
Publication Name: Uniform Commercial Code Law Journal
Subject: Law
ISSN: 0041-672X
Year: 1993
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Fifth Circuit preserves rights of leasehold mortgage as third-party beneficiary of a "deemed rejected" lease
Article Abstract:
In re Austin Development Co. holds that a third party beneficiary of a lease retains rights when the lease is rejected by a debtor in possession or a trustee. The case involved a ground lease by a developer, with a subsequent Chapter 11 filing and deemed rejection of the lease under section 365(d)(4) of the Bankruptcy Code. This decision covers a gap in the Bankruptcy Code, for such rights with 'deemed rejected' leases are not directly addressed.
Publication Name: Uniform Commercial Code Law Journal
Subject: Law
ISSN: 0041-672X
Year: 1995
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Eleventh Circuit holds that cross-collateralization in postpetition financing arrangement is improper
Article Abstract:
The 11th Circuit held in In re Saybrook Manufacturing Co in 1992 that corporate reorganization could not take place through the use of prepetition collateral to secure postpetition debt. This financing arrangement had been challenged by two unsecured creditors. The court did add that 'cross-collateralization' might still be possible in cases where the court was satisfied that the debtor could not obtain any other financing.
Publication Name: Uniform Commercial Code Law Journal
Subject: Law
ISSN: 0041-672X
Year: 1993
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