New Delaware Bankruptcy Court Ombudsman Announced

At the first Bench and Bar meeting held for the 2015-2016 year, Chief Judge Shannon announced that Jeremy Ryan, a partner practicing with the restructuring, bankruptcy, and creditors’ rights group of the Delaware law firm of Potter Anderson & Corroon LLP, has been selected by the Delaware Bankruptcy Court as its ombudsman.  Practitioners are encouraged to first contact the Court with questions and concerns regarding a particular matter, but should feel free to contact Mr. Ryan as well.  Mr. Ryan’s contact information may be found here.

Prepetition Claim of Third Party Service Provider for Fringe Benefits Provided to Debtors’ Employees Entitled to Priority Treatment Under Section 507(a)(5) of the Bankruptcy Code

In re Tropicana Entm’t, LLC, No. 08-10856 (KJC), 2015 WL 6112064 (Bankr. D. Del. Oct. 14, 2015)

In a recent post-confirmation dispute arising in the chapter 11 bankruptcy cases of Tropicana Entertainment, LLC and its related entities (collectively, the “Debtors”), the Honorable Kevin J. Carey was faced with a question over which courts are split—whether a prepetition claim asserted by a third party service provider of employee benefits is entitled to priority under section 507(a)(5) of the Bankruptcy Code.  The answer of the Delaware Bankruptcy Court was yes, such a claim may receive priority treatment pursuant to such section… Read More

On the Eve of the EFH Confirmation Hearing, Bankruptcy Court Issues Opinion on Unsecured Noteholders’ Entitlement to Post-Petition Interest

In re Energy Future Holdings Corp., No. 14-10979, 2015 WL 6660787 (Bankr. D. Del. Oct. 30, 2015)

On the eve of the multi-week confirmation hearing scheduled in the chapter 11 cases of Energy Future Holdings Corp., Judge Sontchi of Delaware’s Bankruptcy Court issued several significant decisions, one of which—analyzed here—rules on whether unsecured creditors are entitled to receive post-petition interest on their claims under four sections of the Bankruptcy Code—section 502(b)(2), section 1129(a)(7) (“Best Interests Test”), section 1129(b) (“Cramdown”), and section 1124(1) (“Unimpairment”).*  First, as a threshold matter, the Court held that an allowable portion of an unsecured claim… Read More

Third Circuit Holds That Bad Faith Determined by the Totality of the Circumstances Provides an Independent Basis for Dismissing an Involuntary Petition

In re Forever Green Athletic Fields, Inc., No. 14-3906, 2015 WL 6080665 (3d Cir. Oct. 16, 2015)

Despite no dispute that the petitioning creditors satisfied the statutory requirements for commencing an involuntary chapter 7 proceeding under section 303(b)(1) of the Bankruptcy Code and that the putative debtor was not paying its debts as they came due, this precedential Opinion of the Third Circuit Court of Appeals adopted the “totality of the circumstances” standard for determining bad faith under section 303 and affirmed the decisions of the lower courts that dismissed the proceeding as a bad faith filing.

In ruling so,… Read More

Who Has Standing to Raise a Potential Conflict of Interest and an Objection to a Firm’s Retention?

Hofmeister v. Official Comm. of Unsecured Creditors (In re Revstone Indus., LLC), No. 13-565 (SLR), 2015 WL 5618890 (D. Del. Sept. 24, 2015)

In this Delaware District Court Memorandum affirming the decision of the Delaware Bankruptcy Court to permit the retention of counsel (“Committee Counsel”) to the Revstone debtors’ official committee of unsecured creditors (the “Committee”), the Court addressed who may object to a retention application and press an asserted conflict of interest.  In Hofmeister, Mr. Hofmeister, former founder and insider of Revstone, objected to the retention of Committee Counsel, asserting that counsel had a conflict of interest because it… Read More

Third Circuit Takes Rare Opportunity to Explore the Four Factors Balanced When Ruling on a Stay Pending Appeal Request

In re Revel AC, Inc., No. 15-1253, 2015 WL 5711358 (3d Cir. Sept. 30, 2015)

Although seemingly clear cut and established under controlling law, the Third Circuit Court of Appeals recently took the opportunity it is so seldom given to focus on how to balance the four factors that determine whether to grant a stay pending appeal under Bankruptcy Rule 8007.  See Fed. R. Bankr. P. 8007.  As a reminder to our readers, the four factors relevant to a stay pending appeal analysis are:  (1) whether the stay applicant has made a strong showing that it is likely to succeed on the… Read More

The Baha Mar Debtors Sent Packing Back To The Bahamas

In re Northshore Mainland Servs., Inc., 2015 WL 5444707, Case No. 15-11402 (KJC), — B.R. —- (Bankr. D. Del. Sept. 15, 2015)

In His Honor’s most recent Memorandum, Judge Carey dismissed the chapter 11 cases of the Baha Mar debtors (the “Debtors”), except as to one—Northshore Mainland Services, Inc, which is a Delaware corporation with operations in the United States.  Despite the Court’s acknowledgment of the significant benefits to all parties in proceeding with a restructuring under chapter 11, the Court appeared constrained to rule that all parties would be best served by dismissal under Bankruptcy Code section… Read More