Quimbee logo
DMCA.com Protection Status

In re American Home Mortgage Holdings, Inc.

388 B.R. 69 (2008)

Case BriefRelatedOptions
From our private database of 35,600+ case briefs...

In re American Home Mortgage Holdings, Inc.

United States Bankruptcy Court for the District of Delaware

388 B.R. 69 (2008)

Facts

In 2005 American Home Mortgage Holdings, Inc. (American) (plaintiff) and Lehman Brothers, Inc. (Lehman) (defendant) entered into a repurchase agreement. In 2005 and 2007, respectively, American purchased two series of notes from Lehman, which Lehman financed. In 2007 Lehman repurchased the notes from American. The repurchase agreement allowed Lehman, as the initial seller of the notes, to make margin calls if the market value of the notes fell below a specific amount. If Lehman made a margin call, American was required to pledge additional value to make up the difference between the market value and the face value of the notes. The repurchase agreement also contained an ipso facto clause, allowing one party to terminate the agreement and foreclose on the notes if the other party filed for bankruptcy. In 2007, after Lehman repurchased the notes, it made two margin calls. American pledged additional value to satisfy the first margin call but refused to satisfy the second margin call. After Lehman informed American that American had defaulted on the notes, American filed for bankruptcy. In response, Lehman sent American a notice explaining that Lehman would exercise its rights under the repurchase agreement’s ipso facto clause to terminate the agreement and foreclose on the notes. American filed a lawsuit in bankruptcy court against Lehman, arguing that the ipso facto clause in the repurchase agreement could not be enforced, and that Lehman had violated Article 9 of the Uniform Commercial Code by exercising its rights under the ipso facto clause in a commercially unreasonable manner. Lehman moved to dismiss the lawsuit, arguing that the safe-harbor provisions of §§ 555 and 559 of the Bankruptcy Code allowed it to enforce the ipso facto clause. Lehman also argued that, because the repurchase agreement was for the purchase and sale of securities, Article 9 did not apply.

Rule of Law

Issue

Holding and Reasoning (Sontchi, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 618,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.

    Unlock this case briefRead our student testimonials
  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

    Learn about our approachRead more about Quimbee

Here's why 618,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 35,600 briefs, keyed to 984 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 618,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 35,600 briefs - keyed to 984 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership