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The Delaware Bankruptcy Insider is a premier blog designed to bring its readers a comprehensive analysis of the latest Delaware corporate bankruptcy news and rulings.  Brought to you by Ashby & Geddes, P.A.

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Karen B. Skomorucha Owens, Esq.
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Post-Confirmation Purchasers of Shares Be Aware:  Third Circuit Holds Shares are Subject to the Plan, Including Its Releases

Zardinovsky v. Arctic Glacier Income Fund (In re Arctic Glacier Int’l, Inc.), 901 F.3d 162 (3d Cir. 2018)

In this precedential Opinion, the Third Circuit Court of Appeals affirmed the decisions of the Delaware Bankruptcy and District courts holding that post-confirmation purchasers of shares are bound by the plan, including its releases and res judicata effect, where the purchasers had notice of the bankruptcy proceedings and the plan and where the sellers of the shares were represented in the bankruptcy proceedings.  In such a case, said the Court, purchasers are held, “like all buyers, to the terms… Read More

Delaware District Court Agrees That Plans Need Not Reflect Bargained For Priority Provisions in Subordination Agreements

Law Debenture Trust Co. et al. v. Tribune Media Co. (In re Tribune Media Co.), 587 B.R. 606 (D. Del. 2018)

In this Memorandum, the Delaware District Court upheld the decision of the Delaware Bankruptcy Court to confirm the plan of reorganization (the “Plan”) of Tribune Media Company (“Tribune”) and its debtor affiliates (collectively, the “Debtors”), despite the fact that the distributions proposed therein on account of certain claims infringed on prepetition subordination agreements.  In rendering the decision, Judge Sleet agreed with Judge Sontchi’s lower court opinion that the strict enforcement of subordination agreements, including provisions therein… Read More

Liquidation Consultants Are Not “Professionals” Requiring Retention Under § 327(a) of the Bankruptcy Code

In re Heritage Home Group LLC, No. 18-11736 (KG), 2018 WL 4684802 (Bankr. D. Del. Sept. 27, 2018) and In re Brookstone Holdings Corp., No. 18-11780 (BLS), 2018 WL 4801890 (Bankr. D. Del. Oct. 1, 2018)

Recently, in the chapter 11 cases of Heritage Home and Brookstone, the United States Trustee (“UST”) objected to the engagement of Gordon Brothers Retail Partners, LLC, Hilco Merchant Resources, LLC (together with Gordon Brothers Retail Partners, LLC, “Hilco”), and SB360 Capital Partners, LLC (“SB360” and together with Hilco, the “Consultants”) to assist the debtors with store closing sales… Read More

Third Circuit Upholds Bankruptcy Court’s Reconsideration Order Described by Dissent as “Troubling – If Not Dangerous – Precedent”

NextEra Energy, Inc. v. Elliott Associates, L.P. (In re Energy Future Holdings Corp.), No. 18-1109, 2018 WL 4354741 (3d Cir. Sept. 13, 2018), aff’g sub nom. 575 B.R. 616 (Bankr. D. Del. 2017)

In this precedential Opinion, the United States Court of Appeals for the Third Circuit (the “Third Circuit”) upheld the decision of the Delaware Bankruptcy Court reconsidering, and thereby denying, a previously approved $275 million termination fee (the “Termination Fee”) to a potential purchaser (NextEra Energy, Inc. (“NextEra”)) in the chapter 11 bankruptcy cases of Energy Future Holdings Corp. and its affiliated debtors (the “Debtors”). … Read More

Delaware District Court Affirms Confirmation Order Approving Horizontal Gift Providing Disparate Treatment to Separate Classes of General Unsecured Claims

Hargreaves v. Nuverra Envtl. Solutions, Inc. (In re Nuverra Envtl. Solutions, Inc.), No. 17-1024 (RGA), 2018 WL 3991471 (D. Del. Aug. 21, 2018)

In this Opinion, the Delaware District Court (the “District Court”) dismissed an appeal of the Delaware Bankruptcy Court’s order confirming the plan of reorganization (the “Plan”) of Nuverra Environmental Solutions, Inc. and its affiliated debtors (the “Debtors”).  While the appeal was dismissed on the basis of equitable mootness, the District Court took an extra step and affirmed the entry of the confirmation order.  In doing so, the District Court addressed the propriety of “horizontal… Read More

Practice Pointers – When Faced With A Dispute Over a Court Order, Seek Court Intervention Sooner Rather Than Later or Face Civil Contempt Sanctions

In re Washington Mutual, Inc., No. 08-12229 (MFW), 2018 WL 704361 (Bankr. D. Del. Feb. 2, 2018)

In this Opinion, Judge Walrath of the Delaware Bankruptcy Court imposed sanctions against the Washington Mutual Liquidating Trust (the “Liquidating Trust”) for its failure to comply with the Court’s final fee order (“Final Fee Order”) that awarded, among other things, a contingency fee (the “Contingency Fee”) to Grant Thornton, LLP (“Grant Thornton”) in connection with certain tax related work it provided postpetition to the Liquidating Trust.

Prepetition, Washington Mutual engaged Grant Thornton to develop a theory to challenge the constitutionality of… Read More

Anti-Assignment Clauses Enforced to Void and Nullify Claims Purchases

In re Woodbridge Group of Cos., LLC, No. 17-12560 (KJC), 2018 WL 3131127 (Bankr. D. Del. June 20, 2018)

Prior to the commencement of the Woodbridge chapter 11 bankruptcy cases, one of the many debtors (“Woodbridge”) issued three promissory notes, each containing an anti-assignment clause.  The clause prohibited the lenders from assigning the notes, the related loan agreements, and any other instruments executed in connection therewith absent the written consent of Woodbridge.  If a non-consensual assignment was attempted, the provision provided that the assignment would be null and void.  Similar language existed in the related loan agreements… Read More

Practice Pointers: Bankruptcy Court Lacks Authority to Transfer Pursuant to 28 U.S.C. § 1631 and A Post-Petition Action Satisfies “Is Commenced” Element for Purposes of Mandatory Abstention

Troisio v. Erickson (In re IMMC Corp.), No. 15-1043 (GMS), 2018 WL 259941 (D. Del. Jan. 2, 2018)

In this Opinion from the Delaware District Court, Judge Sleet affirmed the Bankruptcy Court’s decision denying a liquidating trustee’s motion pursuant to 28 U.S.C. § 1631 to transfer an adversary proceeding to the United States District Court for the Eastern District of Pennsylvania. Relying on plain statutory language, the District Court found that the Bankruptcy Court lacked transfer authority under 28 U.S.C. § 1631 – which limits transfer power to only the courts listed in section 610 – because… Read More