A U. S. Bankruptcy Judge ruled that two separate law firms could continue representing five USA Capital subsidiaries for 90 days. The issue rose because of potential conflicts of interest, the firms represent multiple parties in the case.

"There will be conflicts in the future," the judge said, acknowledging Assistant U.S. Trustee Augie Landis' concerns about conflicts arising when a law firm represents multiple parties in the case."

"The judge referred to two USA Capital funds that pooled money from individual investors and made loans to borrowers, such as developers, who provided real estate as collateral."

The full article will be available on the Web for a limited time:

http://www.lasvegassun.com/sunbin/stories/nevada/2006/may/19/051910389.html

Pam

Here is a link to some comments on the jury verdict in the Lay/Skilling trial. There are some great comments and insights form folks who have, unlike yours truly, been watching the case on a daily basis. I especially liked the praise heaped upon the federal investigators in the whole Enron matter by one of the commentators, Samuel Buell.

Here is a link to the Houston Chronical's blog:

http://blogs.chron.com/legalcommentary/

Have a great long weekend, Mike

Recently, the Bankruptcy Appellate Panel ("B.A.P.") for the 9th Circuit addressed a number of issues in the case of Wall Street Plaza, LLC v. JSJF Corp.

One of the issues that was addressed was the "landlord's cap" under Section 502(b)(6) of the Bankruptcy Code.

In the matter before the court, landlord Wall Street Plaza ("Wall Street") was awarded a state court judgement for damages against the debtor JSJF Corporation ("JSJF" or "Debtor") for breach of lease. JSJF filed a Chapter11 petition shortly after the judgement was awarded. Wall Street filed three proofs of claim, to which JSJF objected. The bankruptcy court sustained the objections and disallowed all three claims. One of the claims was disallowed on the basis that it was not for "rent reserved." This claim is the topic of discussion of this article.

Under Sect. 502(b)(6) of the Bankruptcy Code, a claim of a lessor for damages resulting from the termination of a lease of real property is limited to the rent reserved by the lease, without acceleration, for the greater of one year, or 15 percent, not to exceed three years, of the remaining term of the lease, following the earlier of the petition date and the date on which the lessor repossessed, or the lessee surrendered, the property.

The Court stated that in an earlier opinion In re McSheridan, 184 B.R. 91 (9th Cir. B.A.P. 1995), they had construed Sect. 502(b)(6) as formulating a three part test for determining for what charges are "rent reserved". To be capped, the charge must be: (1) (a) designated as "rent" or "additional rent" in the lease; or (b) provided as the tenant's/lessee's obligation in the lease; (2) related to the value of the property or the lease thereon; and (3) properly classifiable as rent because it is a fixed, regular, or periodic charge.

The Court states that the "landlord's cap" may limit the amount of a lessor's claim, but it is not a criterion for its allowance: it becomes significant only if the claim otherwise allowable under non-bankruptcy law exceeds the cap calculated under the statute.

Therefore, the Court ruled that the bankruptcy court's ruling that the claim was not for rent was an error of law. The Court reversed and remanded for further proceedings for determination of whether the "landlord's cap" applies to some or all of the claim and if so, what that cap is.

Ray

Former Enron executives Kenneth Lay and Jeffrey Skilling were found guilty of conspiracy and fraud in the Enron case. The jury reached the verdicts on the sixth day of deliberations.

Skilling was found guilty on 19 counts of conspiracy, fraud, false statements and insider trading and not guilty on 8 other counts of insider trading. Lay was found guilty on all six counts of conspiracy and fraud. In a separate bench trial, Lay was found guilty on four counts of fraud and false statements. Both face 20 to 30 years in prison.

Sentencing has been set for the week of September 11. Lay was ordered to surrender his passport and post a cash bond.

The trial began January 31, after a 4 and Ω year long government investigation.

For more information, visit the CNNMoney article here: http://money.cnn.com/2006/05/25/news/newsmakers/enron_verdict/index.htm?cnn=yes

Ray

Credit Suisse to Pay $90M, Drop Bankruptcy Claims in Enron Settlement

Switzerland's Credit Suisse group has agreed to settle its part in a lawsuit in the Enron debacle. The group will pay $90M and also withdraw millions in bankruptcy claims. The lawsuit names nine other banks and 100 other financial institutions and trusts. The U.S. Bankruptcy Judge will have to approve this settlement

"Enron's complaint, which spans 500 pages and sets out 76 counts of alleged wrongdoing, has been pending in the U.S. Bankruptcy Court for the Southern District of New York since September 2003. The company filed its bankruptcy petition in that court in December 2001."

The full article will be available on the Web for a limited time:

http://news.lp.findlaw.com/andrews/bf/bnk/20060519/20060519enronmega.html
(full article)

Pam