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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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Ricardo Palacio, Esq.
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Delaware Bankruptcy Court Rejects Per Se Premise that a Discretionary Bonus Payment Can Never Be on Account of “Value”

Jalbert v. Flanagan, et al. (In re F-Squared Investment Management, LLC), No. 15-11469 (LSS),2019 WL 2051005 (Bankr. D. Del. May 7, 2019).

In this Opinion, Judge Silverstein granted in part and denied in part the motions of Brian Flanagan, Matthew Landon, Patrick Coyle, and Scott Kearney (collectively, the “Defendants”)  to dismiss certain fraudulent transfer and insider preference claims brought by the Trustee for the Debtors’ (defined below) liquidating trust (the “Trustee”).  In so doing, Judge Silverstein rejected the Trustee’s premise that an entirely discretionary bonus can never be made in exchange for value.

F-Squared Management,… Read More

On a Mission: Supreme Court Clarifies Effect of Rejection of Executory Contract

Mission Prod. Hldgs., Inc. v. Tempnology, LLC, No. 17-1657 (2019).

In Mission Prod. Hldgs., Inc. v. Tempnology, LLC, the United States Supreme Court resolved a long-standing Circuit Court split in holding that a debtor’s rejection of an executory contract does not eliminate a contract counterparty’s right to use certain debtor trademarks provided thereunder.  Rather, according to the Court, following the debtor’s rejection of such contract, the counterparty retains the rights it received pursuant to the terms of the underlying agreement and applicable nonbankruptcy law.

Generally, Mission Product Holdings, Inc. (“Mission”) entered into a contract with Tempnology,… Read More

Achieved Recoveries Are Not the Benchmark of Fee Reasonableness Says Bankruptcy Court

In re Hospital Partners of America, Inc., et al., No. 08-12180 (BLS) (Bankr. D. Del. Mar. 7, 2019)

In this Opinion, Judge Shannon denied a request by the United States Trustee (the “UST”) to reduce the fees incurred by a chapter 7 trustee’s professionals (the “Professionals”) related to avoidance actions because the fees exceeded the recoveries realized on account of such actions.  In doing so, the Court concluded that the Professionals’ fee requests were reasonable and that the Professionals exercised reasonable judgment at the time… Read More

Challenge of Secured Creditors’ Liens and Claims by a Plaintiff Without Court’s Prior Blessing and Grant of Standing Survives Defendants’ Motion for Summary Judgment

AI Int’l Holdings (BVI) Ltd. v. MUFG Union Bank, N.A., et al. (In re The Weinstein Co. Holdings, LLC, et al.), No. 18-10601 (MFW), 2018 WL 6841349 (Bankr. D. Del. Dec. 20, 2018)

In this Memorandum Opinion, Judge Walrath of the Delaware Bankruptcy Court was given the rare opportunity to review and interpret language contained in the final order authorizing the Weinstein debtors (the “Debtors”) to obtain post-petition financing (the “Final DIP Order”) governing the investigation and challenge of the liens and claims of the Debtors’ prepetition lenders (the “Defendants”).  More specifically, Her Honor was tasked with… Read More

Delaware Bankruptcy Court’s Local Rules For 2019 Now Effective

The Bankruptcy Court for the District of Delaware’s Local Rules for 2019 went effective today, February 1, 2019.  A copy of the 2019 Local Rules can be found here and a redline of the 2019 Local Rules against the 2018 Local Rules can be found here.

Delaware District Court Finds Section 506(b) Does Not Limit Allowability of Unsecured Claims for Contractual Postpetition Attorneys’ Fees

Wilmington Trust Co. v. Tribune Media Co. (In re Tribune Media Co.), No. 15-0116 (RGA), 2018 WL 6167504 (D. Del. Nov. 26, 2018)

In a short Memorandum Order, the Delaware District Court reversed the Delaware Bankruptcy Court’s November 19, 2015 ruling issued in the chapter 11 cases of Tribune Media Company and its affiliated debtors disallowing an indenture trustee’s unsecured claim for postpetition attorneys’ fees arising under the express terms of the governing indenture.  As previously analyzed by the Delaware Bankruptcy Insider, the Bankruptcy Court acknowledged that the allowability under section 502(b) of the… Read More

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