Pub. 10 2015-2016 Issue 5

www.nebankers.org 16 Extraordinary Service for Extraordinary Members. For more information, contact Tom Roubidoux at Kutak Rock LLP at (402) 346-6000 or thomas.roubidoux@kutakrock. com. Roubidoux concentrates his practice in the areas of bankruptcy, workout and surveillance matters, and secured transactions under the Uniform Commercial Code. His primary focus is on lender-side financing in both the commercial and public financemarketplaces, from traditional lending transactions to more complex financing arrangements including asset securitizations and structured finance.  Counselor’s Corner — continued from page 15 Similar to DB Capital Holdings, the In re Bay Club creditor had required certain restrictive covenants to be placed in the debtor’s operating agree- ment, including a prohibition on filing bankruptcy as long as indebtedness was outstanding. Unlike DB Capital Hold- ings , the court declined the creditor’s motion to dismiss. “That the members of Bay Club signed the Operating Agree- ment among themselves rather than acquiescing in the bankruptcy waiver provision in a Loan agreement with Legg Mason is a distinction without a meaningful difference. The bankruptcy waiver in Section 11.1.24 of the Operat- ing Agreement is no less the maneuver of an ‘astute creditor’ to preclude Bay Club from availing itself of the protec- tions of the Bankruptcy Code prepeti- tion, and it is unenforceable as such, as a matter of public policy.” In re Bay Club Partners-472, LLC, No. BR 14- 30394-RLD11. The court referred to the bankruptcy prohibition in the operat- ing agreement as “cleverly insidious.” Id. In re Bay Club casts some doubt on the opportunity DB Capital Hold- ings seemed to hold out and suggests that if the creditor was the source of the operating agreement restrictions, obtaining a result similar to that in DB Capital Holdings might be unlikely whereas documentation that evidences that the restriction was an independent, voluntary decision of the members and considered by them to be in their best interests, etc., may help provide a basis for arguing that the DB Capital Hold- ings rather than the In re Bay Club result should apply.  1 It should be noted that the Tenth Circuit B.A.P. decision in DB Capital Holdings is an unpublished decision and, under the relevant local rules for the B.A.P., may be cited only as persuasive authority and not as precedent. There is no reported deci- sion by the bankruptcy court, which instead read its findings of fact and conclusions of law into the record at the hearing in which the motion to dismiss was granted. 2 In distinguishing the operating agreement provi- sion in DB Capital Holdings from the line of cases that might hold a similar provision void as against public policy, the bankruptcy court stated: “the policy described in the cited cases involves a debtor’s agreement with third parties towaive the benefits of bankruptcy and do[es] not deal with The EFT You can TRUST NetWorks is the Electronic Funds Transfer (EFT) service provider that Nebraskans have used and learned to trust like family for over 30 years. Our highly experienced staff is extremely knowledgeable and resourceful when it comes to assisting your institution. Give us a call to learn more about our services, you’ll have the opportunity to talk to someone who truly cares about and understands your EFT service needs. www.netseft.com Toll Free 800-735-6833 Local 402-434-8202 the debtor’s internal operational structure [and moreover] the actual effect of the provision is simply to require the consent of all of the debtor’s members . . . should all of the debtor’s members agree to file a bankruptcy petition they could at that time simply further amend the operating agreement to so provide for that action . . . . This Court need go no further.” Curiously, neither the bankruptcy court nor the appellate court addressed how the amendment provision found in the debtor’s operating agree- ment, which required the lender’s consent to any amendment, allowed the members to simply “amend out” the bankruptcy provision.