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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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Delaware District Court Disagrees with Bankruptcy Court’s Ruling and Holds That Committee’s Challenge Rights Survived Entry of the Sale Order and Consummation of Sale

Emerald Capital Advisors v. Victory Park Capital Advisors, LLC, et al. (In re Katy Industries, Inc.), 18-cv-01081 (D. Del. 2019)

In this decision, the Delaware District Court reversed in part the Delaware Bankruptcy Court’s July 6, 2018 ruling issued in the chapter 11 cases of In re Katy Industries, Inc. dismissing with prejudice the Committee’s complaint for, among other things, recharacterization and equitable subordination of $7.5 million of the secured lenders’ claim despite clear language in the Sale Order preserving the Committee’s challenge rights.  In reversing and remanding to the Bankruptcy Court, Chief Judge Stark held… Read More

“Straddling the Line”: Delaware Bankruptcy Court Rules That Not All Tax Liabilities Incurred During a Debtor’s Petition Year are Eligible for Administrative Expense Priority

In re Affirmative Insurance Holdings, Inc., Case No. 15-12136 (CSS), 2019 WL 5173773 (Bankr. D. Del. Oct. 15, 2019).

In this Opinion, Chief Judge Sontchi ruled that tax liabilities incurred by a corporation during a year that “straddles” the petition date should be bifurcated, such that tax liabilities stemming from post-petition events are afforded administrative expense priority, whereas tax liabilities stemming from pre-petition events are afforded general unsecured status.  In so doing, his Honor departed from the previous practice of affording administrative expense priority to tax liabilities incurred by a corporate debtor during the year of its petition date in… Read More