In a prior blog post, “Making Sense of The Circuit Split on the Enforcement of Make-Whole Provisions in Bankruptcy,” we discussed the circuit split on the enforcement of a make-whole premium triggered by a bankruptcy petition. Shortly after that post was published, the U.S. Bankruptcy Court for the Southern District of New York entered an order enforcing make-whole premiums for a prepetition default and acceleration of secured promissory notes. In In re 1141 Realty Owner LLC, Case No. 18-12341 (Bankr. SDNY March 18, 2019), Judge Stuart Bernstein found that the make-whole premiums, or “Yield Maintenance Default Premiums,” contained in two promissory notes were akin to liquidated damages provisions, permissible under New York law (the law of the contract). 1141 Realty is interesting inasmuch as Judge Bernstein distinguished the Second Circuit’s decision in Momentive Perf. Materials Inc., et al. v. BOKF, NA, et al., Case No. 15-1682 (2d Cir. Oct. 20, 2017) (“Momentive”), and instead appears to have adopted at least part of the reasoning in the Third Circuit’s decision in In re Energy Future Holdings Corp., Case No. 16-1351, at 7 (3d Cir. Nov. 17, 2016) (“EFH”). Read more…
In the matter of Bar Machiavelli Pty Ltd (Administrator Appointed)  NSWSC 1395
- Bar Machiavelli Pty Ltd (Administrator Appointed) (Tenant) operated a bar and restaurant business under the name Bar Machiavelli from the leased premises.
- In June 2018 the sole director of the Tenant appointed a voluntary administrator to the Tenant.
- Two parties put forward proposals for deeds of company arrangement (DOCA proposals).
- Each DOCA proposal involved an assignment of the lease to the proponent.
- The voluntary administrator considered one DOCA proposal to be more advantageous to the other but was unable to recommend that DOCA proposal to the creditors because the landlord would not consent to assign the lease to that proponent.
- An application was made to the court for an order the landlord consent to the assignment of the lease to the proponent with the more advantageous DOCA proposal (PPB).
- The landlord did not consent to the assignment to PPB on the basis that it considered the financial resources and retailing skills of PPB to be inferior to those of the Tenant.