Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
Secured interests have not changed as a result of the BAPCPA (except with respect to issues of "reclaimed goods," which is wholely inapplicable to your question).
If AIG were to file Chapter 7, GS would keep the collateral to the extent that the CDS actually creates a secured interest (which it may or may not -- it would depend upon the exact verbiage of the CDS).
In Chapter 11, AIG could attempt to "cramdown" GS's interest in any CDS to reflect fair market value. The general requirement is that the Chapter 11 plan be "fair and equitable." There are specific requirements, but basically, if GS gets fair market value for its CDS interests, and so do all the other CDS creditors, then that would likely be sufficient to confirm the plan.
Hope this helps.
NOTICE: Due to overwhelming customer demand for my time, I am forced to limit our correspondence to only one follow-up question per session. If you are on a justanswer.com subscription plan, this does not prevent you from asking new questions for the same subscription fee. It only means that you must open a new question to continue our conversation. You are welcome to open a new question on the justanswer.com Homepage and preface it with my userid: “To Socrateaser....”
Terms and Conditions: By your continuing in this conversation with me, or by your clicking “Accept”, you are expressly agreeing to all of the following: (1) our communication is for entertainment purposes only; (2) you are not consulting me in my professional capacity as an attorney; (3) you do not seek to establish an attorney-client relationship with me, nor do I with you; (4) you will not rely on anything I say and you will obtain appropriate legal counsel via a traditional/office consultation with an attorney licensed to practice in the jurisdiction where your legal issue arises (and you may not use our communication to avoid taxpayer penalties imposed by the U.S. Dept. of Treasury); (5) by communicating with me in this public forum you are irrevocably waiving any right to privacy, confidentiality and attorney-client privilege concerning the matters discussed. You further separately declare that any payment made by you is not consideration for this contract, nor offered for any services rendered by me on your behalf, but rather is made in genuine admiration and respect for my desire to help others. If you do not agree with these terms and conditions, then you must advise me immediately.
The BAPCPA is primarily connected to consumer-bankruptcies. An AIG bankrutpcy would be the farthest thing from. I can't think of anything in the BAPCPA that would be applicable to a large corporation default.
DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.
The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).