Supreme Court To Review FCC Deference In TCPA Cases

On Nov. 13, 2018, the U.S. Supreme Court granted certiorari in Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, after the Fourth Circuit vacated a lower court ruling regarding what constitutes an “unsolicited advertisement” under the Telephone Consumer Protection Act (TCPA). No. 17-1705, 2018 WL 3127423, at *1 (2018).

The Supreme Court is set to review whether the Hobbs Act requires district courts to accept the Federal Communication Commission’s (FCC) legal interpretations of the TCPA. This ruling may bring uniformity to the amount of judicial deference that federal courts afford to the FCC’s TCPA rules in civil litigation.

Continue Reading

IRS Issues Regulations That May Affect Borrowing Costs and Financing Terms of US Multinationals

Recently proposed IRS regulations materially change the way stock and assets of foreign corporations that are “controlled foreign corporations” (CFCs) can be used to support debt of U.S. affiliates. In the commercial lending market, this has the potential to impact long-standing approaches to obtaining guarantees and collateral from CFCs.  In some cases, this may lower a company’s cost of borrowing or provide additional collateral support, particularly in asset-backed/borrowing base loan structures.

Continue Reading

The Ninth Circuit Wades Into the “Autodialer” Fray and Creates a Circuit Split. TCPA Litigants Await FCC Guidance

What constitutes an autodialer or “automatic telephone dialing system” (ATDS) under the Telephone Consumer Protection Act (TCPA) is in flux.

Under the statute, an “automatic telephone dialing system” is defined as “equipment that has the capacity” to “store or produce telephone numbers to be called, using a random or sequential number generator,” and “to dial such numbers.” 47 U.S.C. § 227(a)(1).

Continue Reading

SEC Continues to Expand Examinations Focused on Crypto-Assets

Jay Clayton, chairman of the Securities and Exchange Commission (SEC or Commission), made clear back in December 2017 that his Commission was concerned with the proliferation of crypto-assets. The SEC defines crypto-assets as “crypto-currency (e.g., Bitcoin), initial coin offering (ICO), distributed ledger technology, blockchain and/or any related products and pooled investment vehicles.” Clayton cautioned both retail investors and professional market participants to perform their diligence, including evaluating the securities law implications of transactions, on any investment involving crypto-assets. This interest has recently manifested in an increased focus by the SEC’s examination arm, the Office of Compliance Inspections and Examinations (OCIE), on investment advisers’ and broker-dealers’ activities in crypto-assets.

Continue Reading

OCC Announces It Will Begin Accepting Fintech Charter Applications

On July 31, 2018, the Office of the Comptroller of the Currency (OCC) announced that it will begin accepting applications for special purpose national bank charters from financial technology companies. This “fintech charter” is limited to institutions that do not accept deposits.

The fintech charter was initially unveiled on December 2, 2016, by prior Comptroller of the Currency Thomas Curry. The concept was that fintech firms not linked to national banks were forced to comply with a wide variety of state-level regulations, leading to complex compliance concerns. The fintech charter would apply at the national level and was a step toward creating uniform federal regulatory standards for fintech companies to operate nationally.

Continue Reading

Third Circuit Upholds Foreclosure Sale Against Preference Attack

On July 19, the Third Circuit Court of Appeals entered a decision upholding the results of a foreclosure sale against a debtor’s allegation that the sale was a preference because the bankruptcy estate could have sold the property for a higher price. Veltre v. Fifth Third Bank (In re Veltre), Case No. 17-2889 (3d Cir. July 19, 2018).

Veltre’s home was encumbered by two mortgages prior to her bankruptcy; a senior mortgage in favor of Capital One Bank and a second mortgage held by another bank. Veltre defaulted on her loan, at which point the first lienholder foreclosed and the property went to sheriff’s sale. At the sale, the second lienholder purchased the home at auction for $90,000, which paid off the first mortgage in full.

Continue Reading

Unique challenges for commercial landlords posed by large-scale retailer bankruptcies

(Excerpted from “Retail Bankruptcies – Protections for Landlords,” Practical Law Journal, May 2018, by Lars Fuller)

Due to increasing competition from online sellers, recent years have seen a dramatic uptick in Chapter 11 bankruptcy filings by multistate brick-and-mortar retailers – some that have dozens, or even hundreds, of storefronts. These bankruptcies create challenges for the commercial landlords that own the shopping centers, malls and other establishments that those retailers rented.

A major issue in most retail bankruptcies is which of the retailer’s stores will close and which stores, if any, will be retained or sold to another tenant through an asset sale. Debtor-tenants are usually burdened by unsustainable rent obligations that can weigh down a Chapter 11 case, increasing operational deficits that threaten administrative insolvency and create urgent demands for payment from commercial landlords.

Continue Reading

Ground Leases: Some Basics, Some Specifics and How to Make Them Financeable

Ground leases are fairly common but sometimes overlooked property interests. A succinct but adequate definition of a ground lease was articulated by Herbert Thorndike Tiffany (Tiffany on Real Property § 85.50 [3d ed.]) as follows:

[A]n arrangement in which the fee owner of real property leases to a leasehold tenant many or all of the rights of the beneficial ownership of such real property held by the fee owner. Typically, in a Ground Lease, the leasehold tenant will, for the term of the lease, maintain almost autonomous control over the real property leased, including the right to construct improvements, assign, sublease, and obtain leasehold mortgage financing.

Landlords often use ground leases to (i) retain ownership of the real property for heirs/estate planning purposes, (ii) avoid realizing capital gains if holding with low basis, (iii) create an income stream or (iv) create a financing tool for improvements. Tenants might find a ground lease attractive to (i) create a financing tool for a project and improvements, (ii) reduce financial barriers to entry in the project or (iii) obtain tax deductions for the payment of rent.

Continue Reading

Supreme Court Holds That a Statement About a Single Asset Can Be a Statement Respecting a Debtor’s Financial Condition

The Supreme Court held that a statement about a single asset can be a “statement respecting the debtor’s financial condition” for purposes of determining the application of the exception to discharge set forth in Section 523(a)(2) of the Bankruptcy Code. Lamar, Archer & Cofrin LLP v. Appling, 2018 WL 2465174 (June 4, 2018).

Appling involved a client who failed to pay his attorney. Mr. Scott Appling hired a law firm – Lamar, Archer & Cofrin LLP (Lamar) – to represent him in business litigation. After Appling fell behind on his legal bills (more than $60,000), Lamar threatened to withdraw as counsel. Appling told Lamar that he was expecting a $100,000 tax refund and would use such refund to pay Lamar. In reliance upon this representation, Lamar continued to provide legal services to Appling.

Continue Reading

Supreme Court Resolves Circuit Split Over Application of Section 546(e) to Transactions Involving Conduits

The Supreme Court’s recent decision in Merit Management Group, LP v. FTI Consulting, Inc., 138 S.Ct. 883 (2018), held that transfers made by or to entities that are not “financial institutions” or other covered entities fall outside the scope of 11 U.S.C. § 546(e)’s “safe harbor” from a trustee’s avoidance powers under the Bankruptcy Code, even if those transfers are made through financial institutions or other covered entities. In a unanimous decision, the Supreme Court jettisoned the majority view adopted by the Second, Third, Sixth, Eighth and Tenth Circuits, all of which applied the “safe harbor” to transactions made through covered entities.

Merit Management involved fraudulent transfer claims brought by FTI Consulting, as trustee of a bankruptcy litigation trust, against Merit Management Group, LP to recover approximately $16.5 million paid to Merit in connection with a cash-for-stock agreement involving the sale of Bedford Downs Management Corp. to Valley View Downs, LP.

Continue Reading