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Court upholds preliminary injunction

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Hoosier Energy Rural Electric Cooperative has until the end of the year to find a replacement holder for its credit-default swap or an insurance company will be able to collect on the security. The 7th Circuit Court of Appeals made the ruling today in the financial contract involving the co-op, insurance company, and credit-default swap holder, in addition to upholding the District Court's preliminary injunction on the payout.

In Hoosier Energy v. John Hancock Life Insurance Co., et al., and Ambac Assurance Corp., et al., No. 08-4030, John Hancock agreed to pay Hoosier Energy $300 million for a 63-year lease for part-interest in a Hoosier Energy generation plant. Hoosier Energy agreed to lease it back to John Hancock for 30 years, making payments with the present value of $279 million.

Hoosier Energy entered into the credit-default swap agreement with Ambac to provide John Hancock additional security should Hoosier Energy fall into bankruptcy. As part of the agreement, if Ambac's credit rating dipped below a certain threshold, Hoosier Energy had 60 days to find a replacement that satisfied the contractual standards.

John Hancock tried to collect on the approximately $120 million in security from Ambac because its credit rating slipped and Hoosier Energy couldn't find a replacement after 120 days. The co-op was in negotiations with another company, but John Hancock wanted Ambac to pay up; Hoosier Energy then filed this suit. The District Court eventually issued a preliminary injunction. The District Court ruled that if Ambac pays, Hoosier Energy will go bankrupt covering the outlay, which the District Court called an irreparable injury. It directed Hoosier Energy to post a bond to make sure John Hancock would be made whole should it prevail.

The Circuit Court found there is uncertainty about how this suit will come out under New York law, which the parties agreed supplies the rule of decision. It's not certain whether Hoosier Energy had a duty to replace Ambac or whether this is merely an option, wrote Chief Judge Easterbrook, and the impossibility defense is unavailable if the option characterization is correct. It's uncertain whether the extent of the 2008 credit crunch was foreseeable and whether Hoosier Energy could have replaced Ambac by offering more, or better, security to another intermediary, the chief judge continued.

"All of these uncertainties collectively support the district court's conclusion that Hoosier Energy has some prospect of prevailing on the merits. Because appellate review is deferential, the district court's understanding must prevail at the interlocutory stage," he wrote.

The chief judge noted the longer the impasse continues, the more the balance of equities tilts in favor of John Hancock.

"If, as Hoosier Energy asserts, meeting Ambac's demands under the swap contract will drive it into bankruptcy, then Hoosier Energy must be skating close to the edge, and the longer it skates there the greater the cumulative risk that it will fall over. Similarly Ambac may become less desirable as a swap partner; while this appeal has been under advisement, Ambac's credit rating has been reduced twice," he wrote.

John Hancock is entitled to the security it negotiated against these possible outcomes and the injunction bonds, at only $22 million in liquid security, don't cover the company's exposure. The change in Ambac's credit rating requires the District Court to take a new look at the adequacy of the Rule 65(c) security after receiving the Circuit Court's mandate, wrote Chief Judge Easterbrook. If Hoosier Energy hasn't produced a replacement for Ambac by the end of 2009, the District Court must let John Hancock realize its security.

"The district court itself stressed the word 'temporary' in 'temporary commercial impracticability'; we are confident that the court will not allow 'temporary' to drag out in the direction of permanence," he wrote.

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  1. Good luck, but as I have documented in three Hail Mary's to the SCOTUS, two applications (2007 & 2013),a civil rights suit and my own kicked-to-the-curb prayer for mandamus. all supported in detailed affidavits with full legal briefing (never considered), the ISC knows that the BLE operates "above the law" (i.e. unconstitutionally) and does not give a damn. In fact, that is how it was designed to control the lawyers. IU Law Prof. Patrick Baude blew the whistle while he was Ind Bar Examiner President back in 1993, even he was shut down. It is a masonic system that blackballs those whom the elite disdain. Here is the basic thrust:https://en.wikipedia.org/wiki/Blackballing When I asked why I was initially denied, the court's foremost jester wrote back that the ten examiners all voted, and I did not gain the needed votes for approval (whatever that is, probably ten) and thus I was not in .. nothing written, no explanation, just go away or appeal ... and if you appeal and disagree with their system .. proof positive you lack character and fitness. It is both arbitrary and capricious by its very design. The Hoosier legal elites are monarchical minded, and rejected me for life for ostensibly failing to sufficiently respect man's law (due to my stated regard for God's law -- which they questioned me on, after remanding me for a psych eval for holding such Higher Law beliefs) while breaking their own rules, breaking federal statutory law, and violating federal and state constitutions and ancient due process standards .. all well documented as they "processed me" over many years.... yes years ... they have few standards that they will not bulldoze to get to the end desired. And the ISC knows this, and they keep it in play. So sad, And the fed courts refuse to do anything, and so the blackballing show goes on ... it is the Indy way. My final experience here: https://www.scribd.com/document/299040062/Brown-ind-Bar-memo-Pet-cert I will open my files to anyone interested in seeing justice dawn over Indy. My cases are an open book, just ask.

  2. Looks like 2017 will be another notable year for these cases. I have a Grandson involved in a CHINS case that should never have been. He and the whole family are being held hostage by CPS and the 'current mood' of the CPS caseworker. If the parents disagree with a decision, they are penalized. I, along with other were posting on Jasper County Online News, but all were quickly warned to remove posts. I totally understand that some children need these services, but in this case, it was mistakes, covered by coorcement of father to sign papers, lies and cover-ups. The most astonishing thing was within 2 weeks of this child being placed with CPS, a private adoption agency was asking questions regarding child's family in the area. I believe a photo that was taken by CPS manager at the very onset during the CHINS co-ocerment and the intent was to make money. I have even been warned not to post or speak to anyone regarding this case. Parents have completed all requirements, met foster parents, get visitation 2 days a week, and still the next court date is all the way out till May 1, which gives them(CPS) plenty of to time make further demands (which I expect) No trust of these 'seasoned' case managers, as I have already learned too much about their dirty little tricks. If they discover that I have posted here, I expect they will not be happy and penalized parents again. Still a Hostage.

  3. They say it was a court error, however they fail to mention A.R. was on the run from the law and was hiding. Thus why she didn't receive anything from her public defender. Step mom is filing again for adoption of the two boys she has raised. A.R. is a criminal with a serious heroin addiction. She filed this appeal MORE than 30 days after the final decision was made from prison. Report all the facts not just some.

  4. Hysteria? Really Ben? Tell the young lady reported on in the link below that worrying about the sexualizing of our children is mere hysteria. Such thinking is common in the Royal Order of Jesters and other running sex vacays in Thailand or Brazil ... like Indy's Jared Fogle. Those tempted to call such concerns mere histronics need to think on this: http://www.msn.com/en-us/news/us/a-12-year-old-girl-live-streamed-her-suicide-it-took-two-weeks-for-facebook-to-take-the-video-down/ar-AAlT8ka?li=AA4ZnC&ocid=spartanntp

  5. This is happening so much. Even in 2016.2017. I hope the father sue for civil rights violation. I hope he sue as more are doing and even without a lawyer as pro-se, he got a good one here. God bless him.

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