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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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Prepetition Representation Of Both LLC And Its Sole Member Did Not Disqualify Law Firm From Representing Sole Member In Post-Petition Adversary Proceeding

Stanziale v. MILK072011, LLC (In re Golden Guernsey Dairy, LLC), Adv. No. 14-50953 (KG), 2015 WL 3669932 (Bankr. D. Del. June 12, 2015)

In this Opinion, Delaware Bankruptcy Court Judge Kevin Gross refused to disqualify a law firm under Model Rules of Professional Conduct (“MRPC”) 1.7 and 1.9 from representing the sole member of an LLC in an adversary proceeding where it previously represented both the member company and the LLC in pre-petition unrelated matters.

Golden Guernsey Dairy LLC (the “Debtor”) was a dairy manufacturing business acquired by OpenGate Capital (“OpenGate”) in 2011.  OpenGate formed and controlled “MILK” as… Read More

Supreme Court’s Restrictive Reading Of Bankruptcy Code Section 330 Leaves Bankruptcy Professionals High And Dry

Baker Botts L.L.P. v. ASARCO LLC, 576 U.S. —- (2015)

The Supreme Court made a significant ruling that will encourage leveraged fee attacks on estate professionals in bankruptcy cases.  In an Opinion delivered by Justice Thomas, and joined by five other Justices, the High Court ruled that Bankruptcy Code section 330(a)(1) does not permit a bankruptcy court to award estate professionals fees for work performed in defending a fee application.

In this case, two law firms were retained under Bankruptcy Code section 327(a) to provide legal representation for the debtor, and more specifically, to prosecute fraudulent transfer claims.  The law… Read More

The Assets of “One Nortel” To Be Allocated Equitably On A Modified Pro Rata Basis

In re Nortel Networks, Inc., Case No. 09-10138 (KG), 2015 WL 2374351 (Bankr. D. Del. May 12, 2015)

In an “unprecedented, complex, and massive dispute involving highly integrated multinational enterprises,” Judge Gross of the Delaware Bankruptcy Court, along with Justice Newbould of the Ontario Superior Court of Justice (Commercial List), issued simultaneous opinions after a truly unique twenty-one day cross-border trial, determining how to allocate $7.3 billion to creditors of Nortel Networks Corporation (“NNC”), the indirect parent of more than 130 subsidiaries, located in more than 100 countries.  Consistent with its unprecedented nature, Judge Gross Read More

Delaware Bankruptcy Court Holds That Discharge Does Not Affect Additional Insured’s Rights to Pursue Indemnification Against Debtors’ Insurer

In re SelectBuild Illinios, LLC, Case No. 09-12085 (KJC), 2015 WL 3452542 (Bankr. D. Del. May 28, 2015)

The Delaware Bankruptcy Court recently denied a Motion to Enforce a Permanent Injunction against a contract counterparty, The Ryland Group, Inc. d/b/a Ryland Homes (“Ryland”), and held that Ryland could seek indemnification as an additional insured from the Reorganized Debtors’ insurer, ACE American Insurance Company (“ACE”).

By way of background, Ryland and debtor SelectBuild Illinois, LLC (“SelectBuild”) entered into a construction contract whereby SelectBuild would perform work as a subcontractor for Ryland.  The contract required SelectBuild to indemnify Ryland in certain circumstances… Read More