Commercial Banking, Collections, and Bankruptcy

Bankruptcy Ct. did not err in finding in favor of defendants-corporate officers of debtor-bank holding company, even though Trustee argued that defendants had breached fiduciary duty to holding company to provide holding company’s Bd. of Directors with material information concerning appropriate disposition of $76 million tax refund that Bd. transferred to two failing banks, where defendants had failed to advise Bd. to file for bankruptcy prior to distributing refund to banks so as to maximize holding company’s value of refund for creditors. Record showed that Bd.’s distribution of refund to banks was motivated by advice of governmental regulators and expert outside legal counsel in effort to save banks. Moreover, defendants had no authority to second-guess Bd.’s judgment by generating their own investigation as to best approach regarding distribution of tax refund. Also, at time of refund distribution, holding company was in crisis that was driven by demands of federal and state regulators to financially prop up failing banks.

Bankruptcy Ct. did not err in finding that defendant-SSA properly recovered $17,385 of its overpayment of benefits to plaintiff-debtor from award of back-benefits it owed to plaintiff, even though July 30, 2014 recovery/set-off occurred within 90 days prior to plaintiff filing bankruptcy petition. Record showed that on July 30, 2014, SSA informed plaintiff that she was entitled to $19,400 in disability payments that had accrued at rate of $1,440 per month beginning in May of 2013. All elements for instant set-off were present where SSA’s claim against plaintiff and plaintiff’s award of back benefits occurred prior to filing of bankruptcy petition. Ct. rejected plaintiff’s claim that SSA had improved its petition by entire $19,400 during said 90-day period, where Ct. found that back-benefit award had actually been accruing since May of 2013. Moreover,

Dist. Ct. erred in granting defendant-supplier’s motion for summary judgment in plaintiff-buyer’s action alleging that defendant had failed to sell plaintiff certain quantities of carbon black pursuant to contract between parties. Ct. of Appeals had initially reversed Dist. Ct.’s grant of summary judgment in favor of plaintiff, after finding that instant contract, which required defendant to sell plaintiff 1.8 million pounds of carbon black per year, was not enforceable requirements contract as found by Dist. Ct. On remand, Dist. Ct. found that instant contract was unenforceable under any theory other than requirements contract (which plaintiff could not assert) and that said contract was also unenforceable for lack of mutuality. Ct. of Appeals, though, held that contract had sufficiently definite obligations on both parties so as to make it enforceable, where defendant was required to make certain quantity of carbon black available to plaintiff, and plaintiff could not purchase carbon black from any third-party unless it first offered defendant opportunity to meet terms set forth by third-party. Also, right of first refusal can supply mutuality of obligations under Indiana law. Fact that contract mentioned only approximate quantities of carbon black did not make contract unenforceable. Moreover, plaintiff can proceed on theory of anticipatory repudiation of contract, where defendant: (1) refused to honor one purchase order submitted by plaintiff: (2) attempted to increase price for carbon black for future orders; and (3) initially told plaintiff to contact another suppler for its carbon black needs and only stated that it would do its best to fulfill future orders at contract price.