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Environment: Alert - November 18, 2009

Environmental justice – a mix of environmental and civil rights law and policy – is receiving in­creased attention in the Obama Administration, bringing with it challenges and opportunities for municipalities, facilities and others operating in low-income and minority communities. This alert discusses various aspects of environmental justice and the implications for the Obama Administration. Federal agencies, including the DOJ and EPA, have concluded that low-income and minority communities bear a greater environmental risk than the general population. Now is the right time to take stock of your environmental justice situation and take any prudent proactive steps.

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Bankruptcy and Creditors' Rights
Newsletter - First Quarter 1999
 
In this Issue...
U.S. Supreme Court Update
 
 December 27, 1999
 

Just prior to this newsletter going to print, the United States Supreme Court rendered its decision on May 3, 1999, in the case of Bank of America National Trust and Savings Association v. 203 North LaSalle Street Partnership, - S. Ct.-, 1999 WL 257631 (1999). In an 8-1 decision written by Justice Souter (joined by Chief Justice Rehnquist and Justices O’Connor, Kennedy, Ginsberg and Breyer), the Court reversed the Seventh Circuit Court of Appeal’s affirmance of the lower courts’ confirmation of the debtor’s plan of reorganization.

On May 3, 1999, the U.S. Supreme Court determined that pre-petition equity holders may not, over the objection of a senior class of impaired creditors, contribute new capital and receive new equity interests in the reorganized debtor when the investment opportunity is provided exclusively to the old equity holders. The Court’s decision was based on its interpretation of the confirmation requirements contained in the Bankruptcy Code which prohibit holders of a junior claim or interest from receiving or retaining any interest in property "on account of" such junior claim or interest. This prohibition is commonly referred to as the "absolute priority rule."

The Court did not decide whether a new value exception or corollary to the absolute priority rule survived the enactment of the Bankruptcy Code in 1978. Instead, the Court decided that, assuming the new value exception or corollary was viable, the exclusive right of the old equity holders to contribute new capital and to receive ownership interests in the reorganized debtor was "because of", the meaning attributed by the Court to the term "on account of", the old equity holders’ ownership interest. Consequently, the Court determined that the debtor’s plan was doomed because the plan fell within the prohibition of 11 U.S.C. §1129(b)(2)(B)(ii).

A more complete discussion and an analysis of this long-awaited, and potentially significant decision, will be included in the next issue of this newsletter.

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