Credit Agricole Corporate and Investment Bank New York Branch v. American Home Mortgage Holdings, Inc. (In re American Home Mortgage Holdings, Inc.)
- Citation:
- Court of Appeals for the Third Circuit, No. 09-4295, Precedential Opinion, February 16, 2011
- Tag(s):
-
- Ruling:
- The Court ruled that the phrase "commercially reasonable determinants of value" found in section 562(b) of the Bankruptcy Code clearly means that any commercially reasonable valuation methodology may be employed as evidence of damages under a repurchase agreement. Accordingly, when markets are functioning properly, the market price should be used to determine an asset's value. However, when the market is dysfunctional, skewing the value of the asset, other determinants of value should be employed, e.g., the discounted cash flow methodology.
- Procedural context:
- Direct appeal from the Bankruptcy Court for the District of Delaware finding no damage claim under section 562 of the Bankruptcy Code and sustaining debtor's objections to repurchase claims.
- Facts:
- Debtor sought to disallow or reduce claims for damages pursuant to section 562 of the Bankruptcy Code of claimant, which purchased mortgage loans from debtor under a repurchase agreement. Due to debtor's default under the repurchase agreement, the claimant accelerated same forcing debtor to repurchase the loans at a priced fixed on the date of acceleration. A dispute between the claimant and debtor arose over the proper valuation methodology for the measurement of damages prescribed under section 562 of the Bankruptcy.
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