With one of Delaware’s largest and most active bankruptcy practices, Richards, Layton & Finger has amassed enormous experience handling major chapter 11 cases before the Delaware Bankruptcy Court. Our bankruptcy team’s thorough knowledge of Delaware’s laws and local procedures is invaluable to both clients and co-counsel. Recognized as leading bankruptcy counsel in virtually every major legal directory, we consistently receive top ranking in Chambers USA.
Respected bankruptcy firms throughout the country rely on our expertise, regularly tapping us to serve as their co-counsel in many of the largest and most complex bankruptcy cases filed in Delaware. “The team is first-rate. They’re fantastic lawyers and great strategists,” reports Chambers USA. We represent debtors, lenders, acquirers, investors, and creditors from nearly every business sector, and our bankruptcy litigators prosecute and defend chapter 11 claims, preference actions, fraudulent conveyance claims, challenges to acquisitions, and all other litigation arising in bankruptcy. We also offer unique expertise in mediating complex chapter 11 and bankruptcy litigation disputes, with the addition of a former member of the Delaware Bankruptcy Court to our team.
Chapter 11 Bankruptcy Experience
- Delaware Bankruptcy Leader: Clients benefit from the work of over 30 lawyers and paralegals with vast experience in representing debtors, institutional lenders, creditors, committees, acquirers, investors and other key parties in all aspects of a chapter 11 case.
- Debtor Representation: Richards, Layton & Finger offers comprehensive counsel to clients regarding their available restructuring alternatives. We assist clients in assessing the full range of restructuring options available to them, taking into account each company’s unique financial and market circumstances.
- Institutional Lender, Creditor Representation and Purchasing Assets: Our firm also has extensive experience in representing all types of parties in major chapter 11 cases, including secured creditors, creditors’ committees and prospective purchasers. We have recognized expertise advising secured parties and institutional lenders who provide debtor-in-possession financing to, or the use of cash collateral by, chapter 11 debtors.
Bankruptcy Litigation
- Leader in Delaware Bankruptcy Litigation: One of the strengths of Richards, Layton & Finger’s bankruptcy department is its team of bankruptcy litigators who stand ready to work on contested and litigated matters in chapter 11 cases.
- Types of Issues Litigated: Richards, Layton & Finger bankruptcy litigators handle traditional adversary proceedings as well as contested matters.
- Litigation Strengths: Our clients and co-counsel appreciate that our bankruptcy litigators jump into expedited litigation with little lead time and quickly get up to speed.
Assess 3 Potential Preference Action Defenses
DailyDAC | August 22, 2022
Your company has just been served with a preference complaint. The complaint seeks to recover tens or hundreds of thousands of dollars, even though your company has already taken a loss on the debtor’s accounts. Your initial response is anger at the unfairness of being sued. Fortunately, under Bankruptcy Code § 547(b), Congress included defenses against…
Protecting Mediation Communications in Bankruptcy Cases
Norton Journal of Bankruptcy Law and Practice | August 2022
Over the past decade, some of the most important aspects of Chapter 11 reorganizations have been sent to mediation with increased frequency. Headline-grabbing cases like The Weinstein Companies, Purdue Pharma and Boy Scouts of America have all turned to mediation to attempt to achieve consensus concerning significant tort, personal injury and abuse claims, while smaller and/or…
DailyDAC | August 4, 2021
For many small insolvent companies, an assignment for the benefit of creditors (ABC) can be more attractive than a federal bankruptcy case to maximize value and sell or liquidate a business. Depending on the state—this article will focus on Delaware ABCs—special rules may apply that can make an ABC more or less preferable, especially in an…
The Business Lawyer | Summer 2021
Bidding procedures orders entered by bankruptcy courts typically state that offers attempting to top a stalking horse bid must be “higher and better” than any competing bids. Offers have been found to be “better” even though they have a lower cash “headline” dollar value, where (1) the lower cash offeror also agrees to assume certain liabilities;…
Delaware Laws & Programs Affecting Business – 2020 Edition
2020
Delaware Laws & Programs Affecting Business presents an introduction to Delaware and an overview of the laws and programs relating to doing business in the State. Our economy is diverse, and our legal framework is intentionally crafted to foster robust business activity. Our widely copied business laws lead the nation in clarity and predictability. Government…
Court of Chancery Permits $4.3 Billion Interim Distribution in Altaba Dissolution
Delaware Business Court Insider | November 4, 2020
In In re Altaba, the Delaware Court of Chancery, ruling at a preliminary stage of the dissolution process, authorized Altaba Inc. to make an interim liquidating distribution of up to $4.3 billion to its stockholders. Vice Chancellor J. Travis Laster’s opinion is noteworthy because it is one of the few opinions to authorize an interim distribution…
Are Avoidance Recoveries Capped in the Amount of Unpaid Claims?
ABI Journal | June 2020
Consider this scenario: A debtor confirms its plan and transfers avoidance actions to a litigation trust. The trust then sues the debtor’s former owner, who sold the company through a leveraged transaction prior to bankruptcy, on the basis that the sale was a fraudulent transfer. Let’s assume that the litigation trust sues to recover the full…
Norton Journal of Bankruptcy Law and Practice | June 2020
It has been eleven years since a leading bankruptcy journal published an article entitled “Who Owns Privileged E-Mails in a § 363 Sale Case? Is Ownership Waived When the Debtor’s Computer Servers are Sold?” (the “2009 Article”). The 2009 Article suggested that parties should carefully address in the asset purchase agreement (a) who owns the attorney-client…
Richards, Layton & Finger Welcomes Former DE Bankruptcy Judge Kevin Gross
April 2, 2020
We are proud to announce that former Delaware U.S. Bankruptcy Court Judge Kevin Gross is joining Richards, Layton & Finger as a director in the firm’s Bankruptcy & Corporate Restructuring department. Please click here to view a video of Kevin Gross discussing how he will assist our clients. In addition, please click here to learn more…
Richards, Layton & Finger Welcomes Former Delaware Bankruptcy Judge Kevin Gross
April 2, 2020
After 14 years on the Delaware Bankruptcy Bench, Kevin Gross joins Richards, Layton & Finger.
Questions Remain About When to Appeal an Order, Citing Debtor’s Need for a Breathing Spell
American Bankruptcy Institute Journal | April 2020
On Jan. 14, 2020, a unanimous U.S. Supreme Court held in Ritzen Group Inc. v. Jackson Masonry LLC that “when the bankruptcy court unreservedly grants or denies relief” from the automatic stay, its order is final and therefore immediately appealable. Thus, a creditor’s appeal of a denial of stay relief was untimely because it was filed…
The Balance Sheet Test in Fraudulent Transfer Cases: Is It Appropriate to Fair Value Liabilities?
Insights | Winter 2020
Proving insolvency is an important element of a fraudulent transfer claim. Therefore, it issurprising that courts diverge on how they interpret the most basic of the solvency tests,the balance sheet test. Some courts hold that the balance sheet test compares the recordedamount of liabilities to the fair value of assets. Other courts hold that the balance…
Claims Trading of Notes of a Debtor Might Become More Difficult After Woodbridge
DailyDAC | November 1, 2019
When a debtor files for Chapter 11 or Chapter 7 bankruptcy, often a creditor’s only remedy is to wait for a sale or reorganization, the claims resolution process and other actions to be taken before the debtor or trustee can make distribution on the claim. Unsecured noteholders often do not want to wait for the resolution…
Norton Journal of Bankruptcy Law and Practice | August 2019
State Attorney-Client Privilege Rule Incorporated into Federal Law
Law Journal Newsletters | September 2018
Because state law applies at the time a transaction is negotiated, the parties might assume — reasonably so — that state privilege law will govern communications with their attorneys and financial professionals. But what happens if, years later, a suit is filed in federal court and brings claims under federal law? Does state privilege law still…
State Attorney-Client Privilege Incorporated Into Federal Law
The Bankruptcy Strategist | July 2018
Fraudulent transfer plaintiffsfrequently challenge transactionsthat they say contributed tothe company’s insolvency: leveragedbuyouts, cash-out mergers,share redemptions or othermajor transactions where thecompany parts with assets orincurs liabilities. State law (oftenDelaware law) typically governsthese types of transactions,and structuring them usually requiresthe involvement of attorneys,financial professionals andsometimes investment bankers. Because state law applies atthe time the transaction is negotiated,the parties…
May 15, 2018
Fraudulent transfer plaintiffs frequently challenge transactions that they say contributed to the company’s insolvency: leveraged buyouts, cash-out mergers, share redemptions, or other major transactions where the company parts with assets or incurs liabilities. State law (often Delaware law) typically governs these types of transactions, and structuring them usually requires the involvement of attorneys, financial professionals, and…
Creditors’ Committee Cannot Obtain Derivative Standing to Sue Fiduciaries of an LLC
American Bankruptcy Institute Journal | April 2018
In 2011, the Delaware Court of Chancery surprised many in CML v. Bax by holding that creditors of a limited liability company (LLC) cannot be granted derivative standing to sue members, managers or controllers for breach of fiduciary duty — even if the LLC is insolvent. This created a different regime for LLCs than what…
American Bankruptcy Institute Journal | February 2018
Consider this situation: A corporation isactively considering bankruptcy, yet it neverthelessasks counsel whether it can dividend$7 million to Series B stockholders. Counseladvises against the dividend, but the board of directorsapproves it anyway, and the company pays itonly six weeks before filing a bankruptcy case. This sounds like a bad idea, right? Surprisingly,perhaps not. The Fifth Circuit…
The Bankruptcy Strategist | October 2017
In In re AE Liquidation, 2017 WL 3319963 (3d Cir. Aug. 4, 2017) (the “Third Circuit Opinion” or “AE Liquidation”), the Third Circuit held that a WARN Act notice only must be given when mass layoffs are probable, not when merely foreseeable. As a result, a debtor that was attempting to effectuate a going concern sale…
When Are Goods “Received by the Debtor” for a Section 503(b)(9) Claim?
DailyDAC | August 7, 2017
The World Imports and SRC Liquidation Opinions Section 503(b)(9) of the Bankruptcy Code[i] allows a creditor an administrative expense claim (i.e., a claim with payment priority over other pre-bankruptcy claims) for the value of goods that the debtor “received” within 20 days before filing for bankruptcy. But what precisely does “received” mean in this…
Can an Executive Exert Control of Corporate Attorney-Client Privilege?
DailyDAC | April 17, 2017
What exactly does it mean when a company’s attorneys represent the company, not the company’s executives? Suppose an executive consults with company attorneys to determine if the company’s course of action is legally permissible. Months after receiving the legal advice, the company files for bankruptcy. The executive is also criminally prosecuted over the very actions for…
ABI/Georgetown Law – Bankruptcy: 2016 Views from the Bench
October 7, 2016
2016 Mid-Atlantic Bankruptcy Workshop
August 4, 2016
The Southern District of New York Authorizes the Rejection of Gas Gathering Agreements
ABA | June 1, 2016
In In re Sabine Oil & Gas Corporation, No. 15-11835 (SCC) (Bankr. S.D.N.Y. Mar. 8, 2016), the U.S. Bankruptcy Court for the Southern District of New York issued a bench decision granting Sabine Oil & Gas Corporation’s motion to reject three gas gathering agreements and a handling agreement that were governed by Texas law. In doing…
The Third Circuit Affirms a Debtor’s Ability to Reject an Expired CBA
ABA | June 1, 2016
Trump Taj Mahal Associates, LLC, and certain affiliated entities (collectively, the debtors) owned and operated the Trump Taj Mahal Casino in Atlantic City, New Jersey. Taj Mahal and UNITE HERE Local 54, the largest of the debtors’ employee unions, were party to a CBA that was negotiated in 2011 and had a three-year term. On September…
2016 Distressed Investing Summit
January 27, 2016
ABI Winter Leadership Conference
December 5, 2015
Bankruptcy Remote Entities in Commercial Real Estate Transactions
Practical Law The Journal | November 2015
In commercial real estate transactions, lenders commonly require borrowers to organize as bankruptcy remote entities to limit certain risks associated with a borrower’s bankruptcy filing. This article discusses the fundamentals of using a bankruptcy remote entity to purchase and finance commercial real estate and the key considerations for both lenders and borrowers.
When Does a Chapter 11 Plan Extinguish a Secured Creditor’s Lien?
ABA | October 6, 2015
On October 26, 2009, Northern New England Telephone Operations LLC (NNETO) filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the Southern District of New York. On January 13, 2011, the bankruptcy court confirmed NNETO’s Chapter 11 plan. As of the petition date, NNETO owned several parcels of real property in Concord,…
Delaware’s Long-Form Dissolution Statute: An Underutilized Alternative
MorrisAnderson | September 1, 2015
Many companies are “too broke to go bankrupt.” As the “ABI Commission to Study the Reform of Chapter 11” notes, “anecdotal evidence suggests that Chapter 11 has become too expensive (particularly for small and medium size enterprises),” and more companies are liquidating without attempting to reorganize under federal bankruptcy laws. Those companies often seek alternatives to…
State Law Permitting, Classic Retainers Are Not Property of the Estate
ABA | June 10, 2015
A classic retainer becomes property of the law firm immediately upon payment to the extent permitted by state law. If, after that payment is made, the client commences a bankruptcy case, the payment, to the extent it is properly characterized as a classic retainer, remains property of the law firm and is not property of the…
Court Adopts ‘Time’ Approach in Applying Section 502(b)(6) Cap
Delaware Business Court Insider | June 10, 2015
U.S. Bankruptcy Judge Kevin J. Carey of the District of Delaware’s recent opinion in In re Filene’s Basement LLC, Case No. 11-13511 (KJC), has provided long-awaited guidance on the application of Section 502(b)(6) of the Bankruptcy Code to lease rejection damages claims in the bankruptcy context. Perhaps most significantly, the court concluded that the “15 percent”…
Lawyer Cannot Discharge Client’s Claim Based on Funds Stolen by Lawyer
ABA | June 10, 2015
In a recent decision, the Ninth Circuit Court of Appeals held that a debtor-attorney could not use the unclean hands doctrine to render dischargeable a former client’s claim based on the lawyer’s misappropriation of funds entrusted to him by the former client. See Northbay Wellness Group, Inc. v. Beyries, No. 13-17381 (9th Cir. June 5, 2015).…
PA Bankruptcy Court Rules in In re Merritt
ABA | June 10, 2015
The Bankruptcy Court for the Eastern District of Pennsylvania (the Honorable Jean K. FitzSimon presiding) recently declined to decide whether a chapter 13 debtor can be granted standing to prosecute a fraudulent transfer claim on behalf of its estate under Official Committee of Unsecured Creditors of Cybergenics Corp. v. Chinery, 330 F.3d 548 (3d Cir. 2003)…
SCOTUS Rules in Bank of America v. Caulkett
ABA | June 3, 2015
In Bank of America v. Caulkett, the Supreme Court decided by unanimous decision on June 1 that a debtor in a Chapter 7 proceeding may not avoid a junior mortgage under section 506(d) of the Bankruptcy Code even where the debt owed on the senior mortgage exceeds the value of the debtor’s collateral. Section 506(d) provides…
Fifth Circuit Rules in Villegas v. Schmidt
ABA | May 29, 2015
The Fifth Circuit Court of Appeals recently decided (by decision entered on May 28, 2015) that the Barton doctrine (which requires a plaintiff that wants to sue a trustee to seek leave of the court that appointed such trustee) applies irrespective of whether the underlying claims at issue are claims over which the bankruptcy court…
Bankruptcy Remote Entities in Commercial Real Estate Transactions
Practical Law | May 5, 2015
This Practice Note discusses the use of bankruptcyremote entities in commercial real estatetransactions, including different types of bankruptcyremote entities, the separateness provisions oftenrequired by lenders and the consequences ofsubstantive consolidation. This Note discusses thefundamentals of using a bankruptcy remote entityto purchase real estate, including the reasons aninvestor may be required to establish a separateentity to purchase…
ABA Bankruptcy & Insolvency Litigation Committee, Sound Advice Series | May 2015
Please click HERE to listen to an audio recording of this program from the Sound Advice Series of the ABA Bankruptcy & Insolvency Litigation Committee. …
Journal of Business & Technology Law | March 27, 2015
Litigation against directors and officers is ubiquitous in bankruptcycourts. Indeed, charges of director malfeasance and breach of fiduciary duty areleveled at the outset of many bankruptcy cases—whether in the hallways outside offirst day hearings or creditors committee formation meetings, in early hearings, orin pre-petition letter writing campaigns aimed at encouraging or discouragingspecific board actions. These charges…
Third Circuit Rules in In Re Allen
ABA | February 20, 2015
The Third Circuit Court of Appeals decided recently that a debtor does not need to actually possess property recovered under Section 550 for such property to constitute property of the debtor’s estate under Section 541(a)(3). See In re Allen, No. 13-3543 (3d Cir. Sept. 26, 2014). In Allen, the debtor commenced an adversary proceeding in the…
Delaware Bankruptcy Court Rules in Antecedent Debt Case
ABA | January 27, 2015
Can a plaintiff state a preference claim by generally alleging that one or more of the debtor entities made the transfer at issue on account of an antecedent debt? The Delaware Bankruptcy Court (the Honorable Mary F. Walrath, presiding) recently reminded plaintiffs that the answer is no. See Stanziale v. DMJ Gas-Marketing Consultants, LLC. In …
ABA | January 26, 2015
Does Bankruptcy Rule 9023 impose a time limit to file a motion to reconsider the denial of summary judgment? The Delaware Bankruptcy Court (the Honorable Christopher S. Sontchi, presiding) recently decided no. See Stanziale v. Southern Steel & Supply, L.L.C. In Southern Steel, the defendant moved the court to reconsider its denial of the defendant’s…
January 9, 2015
On January 7, 2015, the United States Bankruptcy Court for the District of Delaware issued an opinion in In re Energy Future Holdings Corp., Case No. 14-10979 (CSS) [D.I. 3183] (the “Opinion”), approving the Debtors’ request to establish a bar date for unmanifested asbestos claims. The decision is significant because the asbestos plaintiffs’ bar has typically…
2015
Although credit bidding — in which the secured creditor can credit bid the amount of its allowed claim in any sale of its collateral by its debtor — is acknowledged as being an important part of the secured creditor’s bundle of rights, some argue that in certain circumstances credit bidding can chill bidding or otherwise prevent…
Mediation in Commercial Bankruptcy
December 10, 2014
This first-time seminar with the bankruptcy judges of the District of Delaware brought together many experienced practitioners and mediators from Delaware and around the country to discuss the ever-growing breadth of mediation in commercial bankruptcy. The seminar investigated the origins and growth of alternative dispute resolution in Delawarecommercial bankruptcy practice, as well as practical considerations and…
ABA | November 11, 2014
Under an opinion dated October 14, 2014, the Delaware Bankruptcy Court denied opposing motion for summary judgment in a proceeding initiated by the plaintiff-trustee to avoid and recover alleged preferential transfers. The defendant (a pre-petition creditor of the debtor) moved for summary judgment on the ordinary course of business defense, arguing that the payments to it…
Delaware Bankruptcy Court Denies Motion to Convert
ABA | November 11, 2014
Under a memorandum order dated October 23, 2014, the Delaware Bankruptcy Court denied a party’s request to have the debtors’ chapter 11 cases converted to chapter 7 cases. While sympathetic to the movant’s request, the court ultimately determined that the relevant parties were making some progress toward the goal of a plan of reorganization and therefore…
Third Circuit Rejects Estoppel Finding and Reverses Order Compelling Arbitration
ABA | October 22, 2014
On October 9, 2014, in Flintkote Co. v. Aviva PLC, No. 13-4055, the Third Circuit reversed an order holding on an estoppel theory that an insurer was required to arbitrate even though it had no written arbitration agreement with the debtor. The Third Circuit held that the debtor had not presented clear and convincing proof that…
October 16, 2014
On October 15, 2014, the Delaware Bankruptcy Court confirmed that the Delaware District Court’s new 6:00 p.m. Eastern Time filing deadline does not apply to filings in the Delaware Bankruptcy Court and that the Bankruptcy Court’s Local Rules and related procedures remain in full force and effect. However, the District Court’s new filing procedures do apply…
88th Annual Conference of the National Conference of Bankruptcy Judges
October 8, 2014
The National Conference of Bankruptcy Judges provides continuing legal education to judges, lawyers, and other professionals; promotes cooperation among the bankruptcy judges; secures a greater degree of quality and uniformity in the administration of the bankruptcy system; and improves the practice of law in the bankruptcy courts of the United States. Mark Collins was a panelist at…
ABA | October 7, 2014
On September 30, 2014, the United States District Court for the District of Delaware entered an order affirming the Delaware Bankruptcy Court’s grant of summary judgment to a defendant/appellee on a plaintiff/appellant’s claims to avoid and recover two equity distributions totaling $55 million as constructively fraudulent transfers. Whyte v. Ritchie SH Hldgs. LLC, et al (In…
Fiduciary Considerations for Pre-Bankruptcy Transactions
Delaware Business Court Insider | September 24, 2014
While Chapter 11 remains an attractive mechanism for selling distressed assets, some purchasers and sellers looking to avoid the costs or oversight associated with the Chapter 11 process instead choose to effectuate a pre-bankruptcy sale followed by filing a Chapter 7 petition. There is no denying that Chapter 11 can be expensive and that there may…
2014 ABA Section of Litigation Fall Leadership Meeting
September 18, 2014
The 2014 ABA Section of Litigation Fall Leadership Meeting gave attendees the opportunity to work side by side on developing and implementing strategies for the 2014–15 bar year. During this event, Marcos Ramos spoke on “Editorial Challenges and Solutions.” …
Delaware Bankruptcy Court Denies Motion to Compel Production of Post-Sale Financial Information
ABA | September 11, 2014
Under an opinion dated August 6, 2014, the Delaware Bankruptcy Court denied a motion to compel the production of post-sale financial information. The plaintiff’s claims were for breach of fiduciary duty and aiding and abetting thereof arising from the debtor’s pre-petition sale of certain assets to the defendants. The defendants were the former officers of the…
Delaware Grants Motion for Contempt and Indicates that Incarceration Can Be Appropriate Sanction
ABA | September 3, 2014
In Burtch v. Masiz, the United States Bankruptcy Court for the District of Delaware granted the plaintiff-trustee’s motion for contempt as against a judgment-debtor who did not comply with the terms of a discovery-related order earlier entered by the court.
Bankruptcy Court’s Refusal to Appoint Financial Group as Estate Professional Is Not Misconduct
ABA | August 22, 2014
In In re Complaint of Judicial Misconduct, the United States Court of Appeals for the Ninth Circuit rejected a complaint for judicial misconduct filed by the principal owner of a financial group against a sitting bankruptcy judge who refused to approve the appointment of the financial group based on the judge’s view that the financial group had disregarded the terms of retention orders entered by the judge in other cases.
Bankruptcy Court Can Compel Defendants to Convey Trust Interest in Extraterritorial Realty
ABA | August 22, 2014
The United States Court of Appeals for the Ninth Circuit affirmed the order of the United States Bankruptcy Court for the Southern District of California that required the defendants-appellants to return their beneficial interest in Mexican realty to debtor’s estate.
Puerto Rico Bankruptcy Court Denies Creditor’s Requests to Amend Proof of Claim
ABA | August 22, 2014
In In re Martinez, the United States Bankruptcy Court for the District of Puerto Rico held that a creditor was responsible for its own failure to accurately identify the secured and unsecured portions of its claim and the Chapter 13 trustee did not have to verify the accuracy of the claim as filed by the creditor.
ABA | August 22, 2014
In Stanziale v. Heico Hldgs., Inc., et al., the United States Bankruptcy Court for the District of Delaware granted a motion to dismiss deepening insolvency and Texas statutory fiduciary duty claims with prejudice but granted the chapter 7 trustee 30 days to file an amended complaint sufficient to state a common law breach of fiduciary duty claim under Texas law.
When a Settlement No Longer Is Consensual
ABA | August 4, 2014
A quick review of Bankruptcy Rule 9019 makes clear that the settlement requires court approval. But does this mean that no settlement is binding until approved by the court, such that a party can unilaterally walk away before that point?
10th Annual Mid-Atlantic Bankruptcy Workshop
July 31, 2014
Robert Stearn Jr. will speak during a panel entitled “Shakedowns vs. the Pursuit of Justice: The Current Landscape of Avoidance Actions.” This panel will provide an overview of new uses of cause of action, Section 546(e) cases including Lyondell and Tribune, and proposed changes to the UFTA.…
Addressing Section 503(b)(9) Claims Issues at the Outset
Delaware Business Court Insider | May 28, 2014
This article discusses the impact that Section 503(b)(9) of the Bankruptcy Code may have on the funding needs of a case and explores the manner in which the Delaware bankruptcy court has addressed the issue.
Fifth Circuit Affirms Fee Enhancement, Reverses Fees Incurred in Defending Fee Application
ABA | May 2, 2014
In In re Asarco, the Fifth Circuit held that 11 U.S.C. § 330 permits the bankruptcy court to enhance the fees of counsel but does not permit the bankruptcy court to award attorney fees incurred by counsel in defending its fee application. ASARCO was a copper mining, smelting and refining company. Two years before it commenced…
Commercial Insolvency Reporter | April 2014
Courts in the two circuits, which saw the majorityof 2013’s Chapter 15 recognition proceedings,recently addressed—and came to oppositeconclusions about—a novel issue: whether anentity is required to have property in the UnitedStates to qualify for relief as a debtor underChapter 15 of the United States BankruptcyCode. Chapter 15 is the equivalent of a proceedingunder Part IV of…
Significant Issues for Fraudulent Transfer Actions
March 25, 2014
This course presents an overview and comprehensive discussion of various significant issues concerning fraudulent transfer actions.
Effect of Post-Petition Payments on ‘New Value’ Defense
Delaware Business Court Insider | February 5, 2014
The U.S. Court of Appeals for the Third Circuit’s recent decision in Friedman’s Liquidating Trust v. Roth Staffing Companies LP, provides bankruptcy practitioners with long-awaited guidance on the effect that the post-petition payment of prepetition claims has on the calculation of the “new value” defense for purposes of determining preference liability.
Is a Foreign Debtor with No Assets in the U.S. Eligible for Chapter 15 Relief?
The Bankruptcy Strategist | February 2014
This article first sets forth the statutory provisions that led to the differing results in Barnet and Bemarmara and then explores the reasoning of the two opinions.
The Official Receiver’s International Conference on Corporate Insolvency
January 19, 2014
Mark Collins will be part of a panel entitled “Administration of a Chapter 11 Case” and will discuss “DIP Financing and the Timeline of a Case.”…
December 19, 2013
Within one week, the Second Circuit Court of Appeals issued an opinion on an issue of first impression (at the Circuit level) in chapter 15 cases, and the Delaware Bankruptcy Court issued an oral ruling, disagreeing with the Second Circuit’s opinion. The issue is whether a debtor must have assets located in the United States to qualify for chapter 15 relief.
In What State Is the Harm Felt When a Derivative Suit Is Pursued By Creditors?
The Bankruptcy Strategist | December 2013
Can a trustee of a litigation trust created under a plan sue in a U.S. bankruptcy court the directors and officers of a non-debtor Canadian parent, when many of the defendant D&Os had rarely set foot in the forum state? According to a recent Tenth Circuit opinion, the answer is yes. Newsome v. Gallacher, 722 F.3d…
November 18, 2013
The Third Circuit Court of Appeals holds that a bankruptcy claim transferred to a third-party purchaser can be disallowed under 11 U.S.C. § 502(d) if the original claimant received property that is avoidable or recoverable by the bankruptcy estate.
November 6, 2013
The Delaware bankruptcy court holds that electricity is not a “good” for purposes of section 503(b)(9) of the Bankruptcy Code, which confers administrative expense priority status upon claims for goods received by a debtor within 20 days of a bankruptcy filing.
Third Circuit Limits Equitable Mootness Doctrine
Delaware Business Court Insider | October 16, 2013
The U.S. Court of Appeals for the Third Circuit reaffirmed its narrow construction of the doctrine of equitable mootness in In re SemCrude L.P.
October 11, 2013
An opinion was issued in Giuliano et al. v. Federal Deposit Insurance Corporation which held that a tax sharing agreement between a chapter 7 debtor and its non-debtor subsidiary created a debtor-creditor relationship between the parties.
August 29, 2013
Third Circuit Court of Appeals affirms the recognition of an Australian liquidation proceeding as a foreign main proceeding in In re ABC Learning Centres Limited, n/k/a ZYX Learning Centres Limited.
Third Circuit Court of Appeals Narrowly Construes Equitable Mootness Doctrine
August 28, 2013
Third Circuit Court of Appeals reaffirms its narrow construction of the doctrine of equitable mootness in In re SemCrude, L.P., et al., Samson Energy Resources Company, et al. v. SemCrude, L.P., et al.
9th Annual American Bankruptcy Institute’s Mid-Atlantic Bankruptcy Workshop
August 8, 2013
Daniel DeFranceschi will speak at this annual workshop in Hershey, Pennsylvania.
Tracing Del. Bankruptcy Court’s Unclear Tracing Rules
Delaware Business Court Insider | May 22, 2013
An inherent tension exists between the Bankruptcy Code and the common-law doctrine of constructive trust.
April 26, 2013
In In re School Specialty, Inc., the United States Bankruptcy Court for the District of Delaware denied a motion brought by the Official Committee of Unsecured Creditors which sought to disallow a $23.7 million “early payment fee” in a prepetition credit agreement.
Delaware Bankruptcy Court: Mandatory Mediation Update
ABA | Spring 2013
Recently, the Delaware Bankruptcy Court published its amendments to the local rules effective as of February 1, 2013.
Bankruptcy Court Addresses Discoverability of Documents Prepared for Mediation
Delaware Business Court Insider | January 23, 2013
Recently, in Burtch v. Luminescent Systems (In re AE Liquidation), the U.S. Bankruptcy Court for the District of Delaware was faced with a motion to protect from discovery documents drafted in preparation for mediation. While the court ultimately granted the motion for protective order, the decision should serve as a reminder to practitioners of the potential for discovery of documents prepared for mediation.
ABA | December 20, 2012
ABA inaugurates their Local Rules Corner series with a look at the Delaware Bankruptcy Court’s local rules.
Course of Business Defense Path to Preference Dismissal
ABA | November 19, 2012
In Gellert v. Coltec Indus., Inc., the Delaware Bankruptcy Court held that the ordinary course of business defense under 11 U.S.C. § 547(c)(2)(A) can be applied on a motion to dismiss, and that a transfer cannot be constructively fraudulent when payment of the transfer resulted in a dollar-for-dollar satisfaction of an antecedent debt.
ABA Business Law Section Fall Meeting
November 16, 2012
Christopher Samis will speak during this CLE-accredited meeting in Washington, D.C.
Equitable Tolling Applied to Adversary Proceeding Limitation
ABA | November 13, 2012
In Liberty Brands, LLC v. Feit, the Delaware Bankruptcy Court denied the defendants’ motions to dismiss the plaintiff-trustee’s claims to recover unauthorized post-petition transfers under 11 U.S.C. § 549.
Third Circuit Affirms Denial of Substantial Contribution Claim and Reaffirms Lebron Test
Delaware Business Court Insider | September 26, 2012
In a recent decision in In re Tropicana Entertainment, the U.S. Court of Appeals for the Third Circuit affirmed the denial of a substantial contribution claim filed by the Ad Hoc Consortium of Senior Subordinated Noteholders.
Delaware Court Denies Motion to Stay Order, Pending Appeal
ABA | September 25, 2012
Appellants must justify the need for staying a court’s decision on four criteria, and here, the Third Circuit found that the burden was not met for any of them.
August 24, 2012
In In re Tribune Company, et al., the Delaware Bankruptcy Court granted a motion for stay pending appeal of a plan confirmation order subject to the movants posting a $1.5 billion supersedeas bond.
View Emerging That Stern v. Marshall Does Not Apply to Fraudulent Transfer Claims
Delaware Business Court Insider | May 23, 2012
Since the Supreme Court decided Stern v. Marshall nearly a year ago, courts have diverged sharply on whether bankruptcy courts still have authority over fraudulent transfer claims.
American Bankruptcy Institute’s 30th Annual Spring Meeting
April 19, 2012
Director Sam Nolen will speak at this annual conference in National Harbor, Maryland.
Two-Year Look-Back Period Cannot Be Equitably Tolled
ABA | February 22, 2012
In Industrial Enters. of Am., Inc. v. Burtis, the Delaware Bankruptcy Court denied a motion to reconsider its holding that equitable tolling cannot enlarge the two-year look-back period under 11 U.S.C. § 548(a).
3rd Circuit Narrowly Construes Police Power Exception to Automatic Stay
Delaware Business Court Insider | January 18, 2012
In a recent decision in In re Nortel Networks Inc., the 3rd U.S. Circuit Court of Appeals held that Bankruptcy Code Section 362(b)(4)’s “police power exception” to the automatic stay should be narrowly construed.
Lack of Oversight May Leave Operators Liable
ABA | November 29, 2011
In Lemington, the Third Circuit considered an appeal from the decision of the U.S. District Court for the Western District of Pennsylvania to enter summary judgment in favor of the directors and officers of a Pennsylvania nonprofit corporation on claims for breach of fiduciary duty and deepening insolvency.
Third Circuit Provides Guidance on Determining Value
ABA | November 15, 2011
In Am. Home Mortg., the Third Circuit addressed an issue of apparent first impression: whether the term “commercially reasonable determinants of value” under section 562(b) is limited to market or sale value.
Reliance on Client’s Automated Information System May Support Rule 9011 Liability
ABA | November 14, 2011
A recent decision of the Third Circuit, In re Taylor, a personal bankruptcy case, suggests that, in certain circumstances, counsel’s reliance on a client lender’s information systems can lead to the imposition of sanctions against not only the client, but also against counsel.
TOUSA, USACafes, and the Fiduciary Duties of a Parent’s Directors Upon a Subsidiary’s Insolvency
Norton Annual Survey of Bankruptcy Law | November 2011
In this article, we examine the TOUSA opinion, and the doctrines it relies on, in an attempt to understand how these doctrines should be treated together.
Recent Decisions Illustrate the Limits of the Post-Confirmation Jurisdiction of the Bankruptcy Court
Delaware Business Court Insider | October 19, 2011
Bankruptcy court jurisdiction suddenly has become a hot topic in light of the U.S. Supreme Court’s June 2011 opinion in Stern v. Marshall. However, Stern is not the only issue affecting bankruptcy court jurisdiction.
8th Annual Institute on Corporate, Securities, and Related Aspects of Mergers and Acquisitions
October 13, 2011
Directors Lisa A. Schmidt and Gregory P. Williams will speak at the 8th Annual Institute on Corporate, Securities, and Related Aspects of Mergers and Acquisitions in New York City.
Delaware Laws & Programs Affecting Business – 2011 Edition
July 2011
This guide presents an introduction to Delaware and an overview of the laws and programs relating to doing business in the State.
Delaware Business Court Insider | June 1, 2011
In two recent decisions, the Delaware Bankruptcy Court rejected the imposition of WARN Act liability on corporations affiliated with debtors.
Delaware’s Solvency Test: What Is It and Does It Make Sense?
Delaware Journal of Corporate Law | 2011
This article examines the ambiguities in Delaware solvency law and recommends that the Delaware courts clarify the law and adopt uniform solvency tests.
In re 15375 Memorial Corp.: One More Look
ABI Journal | April 2011
This article is in response to a recent Straight & Narrow article and looks more closely at the decision handed down in that case.
Norton Journal of Bankruptcy Law and Practice | April 2011
Almost four years ago, the Delaware Supreme Court held that while creditors of an insolvent Delaware corporation do not have the right to assert direct claims for breach of fiduciary duty against officers and directors, they may obtain derivative standing to enforce the company’s claims.
Bankruptcy Litigation Advocacy Program
March 11, 2011
Directors Mark D. Collins and Russell C. Silberglied will speak at this Federal Bar Association program in Wilmington, Delaware.
The 16th Annual Rubenstein-Walsh Seminar in Professionalism and Ethics
February 18, 2011
Director Russell C. Silberglied will speak at this seminar, sponsored by the Delaware State Bar Association and the St. Thomas More Society, in Wilmington, Delaware.
Court Awards Costs, Not Attorney Fees, Due to American Rule
ABA | 2011
In Claybrook v. Autozone Texas, L.P., the Delaware Bankruptcy Court awarded costs to the defendants based in part on the court’s finding that the plaintiff-trustee failed to demonstrate a viable basis for his claims against the defendants.
Insurers’ Tangible Disadvantage Is Sufficient Injury for Article III Standing
ABA | 2011
The Third Circuit held that two liability insurance carriers have standing to object to their insured’s plan of reorganization because “when a federal court gives its approval to a plan that allows a party to put its hands into other people’s pockets, the ones with the pockets are entitled to be fully heard and to have their legitimate objections addressed.”
Third Circuit Addresses Issue of First Impression
ABA | 2011
In Marcal, the Third Circuit addressed an issue of first impression under the Employee Retirement Income Security Act as amended by the Multiemployer Pension Plan Amendments Act: Can the portion of withdrawal liability attributable to post-petition services qualify as an administrative expense of the debtor’s estate?
November 18, 2010
Delaware Bankruptcy Judge Shannon holds in the Accuride chapter 11 case that a noteholder, who gave erroneous information to the debtor in its subscription to a rights offering for new notes pursuant to a plan, was not entitled to an additional distribution to cover the difference in value between what it thought it was subscribing for and what it actually submitted to the debtor in its subscription form.
State Capital Group’s 2010 Annual Meeting
September 30, 2010
Directors Gregory V. Varallo and Daniel J. DeFranceschi will speak at the State Capital Group’s 2010 Annual Meeting in Las Vegas, Nevada.
Delaware Bankruptcy Law Update: In re Leslie Controls, Inc.
September 24, 2010
Delaware Bankruptcy Court holds that the “common interest doctrine” protects privileged communications that the Debtor shared with pre-petition Ad Hoc Committee.
6th Annual Mid-Atlantic Bankruptcy Workshop – Sponsored by the American Bankruptcy Institute
August 5, 2010
Director Mark D. Collins will act as moderator of a session entitled Rule 2019 Issues at ABI’s Mid-Atlantic Bankruptcy Workshop in Cambridge, Maryland.
August 3, 2010
In two recent decisions, the Court of Chancery addressed the issue of disclosure of free cash flow estimates in connection with a merger.
Mock Oral Argument for Bankruptcy Inns of Court for Delaware and New Jersey
June 15, 2010
Director Russell Silberglied and associate Cory Kandestin will present a mock oral argument for a joint session of the Bankruptcy Inns of Court for Delaware and New Jersey in Philadelphia, PA.
Delaware Bankruptcy Law Update – The Grossman’s and Exide Decisions
June 4, 2010
In two recent Third Circuit opinions, the Court: (1) en banc overruled the controversial Frenville test and set a new standard as to when a “claim” arises, and (2) found an agreement containing a trademark license not to be executory, with a concurring opinion criticizing those courts following Lubrizol.
Does Rule 2019 Apply to Ad Hoc or Informal Committees?
The Bankruptcy Strategist | April 2010
The debate over whether ad hoc or informal committees or groups of creditors or interest holders (“ad hoc committees”) must comply with Bankruptcy Rule 2019 recently intensified due to a split among several Bankruptcy Court decisions.
Intellectual Property – Judge Joseph J. Farnan Jr. Announces Retirement
January 27, 2010
In a January 26, 2010 notice posted on the United States District Court of Delaware’s website, it was announced that Judge Joseph J. Farnan Jr. will retire from the bench effective July 31, 2010.
Bankruptcy Law Update: Kelson Channelview LLC v. Reliant Energy Channelview LP
January 25, 2010
Third Circuit Court of Appeals Reaffirms (and Potentially Relaxes) O’Brien Break-Up Fee Standard
Bankruptcy Law Update: Rule 2019
January 22, 2010
Delaware Bankruptcy Judge Sontchi holds, in the Six Flags chapter 11 case, that an informal committee is not a “committee” within the plain meaning of Rule 2019 unless it is formed by a larger group either by consent, contract, or operation of law, thereby declining to follow recent decisions of the United States Bankruptcy Courts for the Southern District of New York and the District of Delaware.
Sam Nolen is a panelist at the 15th Annual Rocky Mountain Bankruptcy Conference
January 21, 2010
Straddling the Continental Divide at Rocky Mountain National Park: Ethical and Legal Challenges in Advising Boards of Directors of Distressed Companies (Large and Small).
Third Circuit Delivers Key Decision on Credit Bidding
ABA | 2010
On March 22, 2010, the U.S. Court of Appeals for the Third Circuit addressed whether pursuant to a plan of reorganization a debtor may sell assets free and clear of all liens at an auction at which the secured creditor is not permitted to credit bid.
Bankruptcy Court Rules on Aggregate Value and Constructive Fraud
ABA | 2010
The Honorable John J. Thomas of the Bankruptcy Court for the Middle District of Pennsylvania issued an opinion of apparent first impression under section 547(c)(9) of the Bankruptcy Code. Section 547(c)(9) provides that the trustee in a case filed by a debtor whose debts are not primarily consumer debts may not avoid a transfer under section 547 if “the aggregate value of all property that constitutes or is affected by such transfer is less than $5,475.”
Norton Journal of Bankruptcy Law and Practice | August 2009
In the wake of opinions such as the Delaware Court of Chancery’s Trenwick America Litigation Trust v. Ernst & Young, L.L.P., the Third Circuit’s In re CitX Corp., Inc., and the Delaware Bankruptcy Court’s In re Radnor Holdings Corp., many had proclaimed the controversy theory of deepening insolvency to be “dead.”
American Bankruptcy Institute Journal | February 2009
While Postorivo is one of the first cases addressing who owns the privilege in these scenarios, it will not be the last. In a world where 90 percent of the important documents in discovery are electronically stored information, and in an environment where asset sales are far more common than true debt-to-equity reorganizations, this issue…
Can the Claims of Individual Creditors Be Assigned to a Litigation Trust?
The Bankruptcy Strategist | January 2009
Can the bankruptcy plan provide that the securities claims — which are not estate causes of action because they belong to the bondholders individually, not to the company — be assigned to the litigation trust so that the trust can efficiently litigate these claims and distribute the proceeds thereof to the bondholders? This article explores the…
October 17, 2008
Delaware Bankruptcy Court holds that timing of employee termination — pre-petition or post-petition — determines whether WARN Act damages are accorded administrative expense priority.
American Bankruptcy Institute Journal | October 2008
The Brown Schools opinion dismissed a cause of action for deepening insolvency, but declined to dismiss a traditional cause of action for breach of fiduciary duty. In doing so, the court determined not to dismiss what the defendants called a “disguised” deepening insolvency claim, though the earlier decision of Radnor Holdings did just that. This article…
September 2008
Much has been written about the origins, history and development of deepening insolvency. It is beyond the scope of this article to describe that history in detail here. However, a very brief background is necessary to aid an understanding of how Brown Schools, Radnor and Troll Communications fit into the paradigm.…
Trenwick America Litigation Trust v. Ernst & Young LLP
August 11, 2008
Delaware Court Of Chancery Holds That No Cause Of Action For “Deepening Insolvency” Exists Under Delaware Law
OHC Liquidation Trust v. Credit Suisse First Boston, et al.
June 12, 2008
Equitable defense results in dismissal of claims against financial advisor.
DE Bankruptcy Court Enforces X-Clause
The Bankruptcy Strategist | April 2008
The Dura case should provide necessary caution to those parties who trade in distressed debt. The terms of these types of instruments must be closely scrutinized before making an investment, as the provisions of these agreements require considerable analysis. If an investor, upon fully considering the ramifications of subordination and the narrow scope of an…
Kurak v. Dura Automotive Sys., Inc.
January 3, 2008
Delaware Bankruptcy Court Enforces “X-Clause” in Subordinated Note Indenture
Did the Delaware Supreme Court Break the ‘Directors’ Shield’?
The Bankruptcy Strategist | August 2007
Credit Lyonnais provided a “shield” to directors against shareholder suits alleging that directors breached their duties to shareholders by acting to protect creditors. Courts around the country have adopted this view, and attorneys have become accustomed to advising boards of directors based on the assumption that this is indeed the law. The Delaware Supreme Court,…
Section 546(c) and Reclamation Rights after BAPCPA: A Response to Wilson and LeHane
American Bankruptcy Institute Journal | April 2007
The Delaware Bankruptcy Court may have the occasion to consider additional reclamation-related issues in the AMS case. The court recently approved the debtors’ request for certain uniform procedures for its consideration of all reclamation claims, pursuant to which the debtors are required to file a written report with the court proposing specific treatment for each…
A Measured Response to Critics of Delaware Venue
American Bankruptcy Institute Journal | April 2007
Some have argued recently that Delawareis no longer the “knee jerk” forum of choice for bankruptcy filings. The argument is that recent Third Circuit rulingson substantive consolidation, the absolute priority rule and “deepening insolvency” make the Southern District of New York the better venue choice over Delaware. As discussed below, these criticisms fail to carefully analyze…
Proving Solvency: Defending Preference and Fraudulent Transfer Litigation
The Business Lawyer | February 2007
Litigating solvency can be a complicated endeavor. This article provides a general road map for proving solvency in the defense of preference and fraudulent transfer litigation. The three common measures of solvency are discussed: the “balance sheet” test; the “unreasonably small capital” test; and the “ability to pay debts” test. The article also provides practical suggestions…
Simon & Schuster, Inc. v. Advanced Marketing Services, Inc.
January 23, 2007
Delaware Bankruptcy Court Denies Reclamation Claimant’s Request for Temporary Restraining Order Due to Lender’s Lien on Reclaimed Goods
May 2, 2006
Delaware Bankruptcy Court Approves Non-Consensual Third Party Releases in Chapter 11 Plan
ABI Journal | February 2003
The U.S. Bankruptcy Court for the District of Delaware has issued bench rulings in two recent cases, In re NII Holdings Inc. and In re Stations Holdings, which together establish a bright-line rule for the use of lock-up agreements in connection with voting on a chapter 11 plan.
Written Consents – A Powerful Tool in Hostile Battles for Corporate Control
Delaware Journal of Corporate Law | 1989
This note will discuss several important aspects of the Delaware written consent mechanism.