Third Circuit Reversal Paves the Way For NextEra to Potentially Recover Administrative Expenses Incurred in Connection With Failed Merger

In re Energy Future Holdings Corp., No. 19-3492, 2021 WL 957301 (3d Cir. Mar. 15, 2021)

In this precedential opinion, the United States Court of Appeals for the Third Circuit (the “Third Circuit”) reversed the decisions of the Delaware Bankruptcy and District Courts denying the application filed by NextEra Energy, Inc. (“NextEra”) for $60 million in administrative expenses under Section 503(b)(1)(A) of the Bankruptcy Code in connection with a sale that ultimately did not go through.  

The dispute arose in the chapter 11 bankruptcy cases of Energy Future… Read More

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

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

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

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

A Third Circuit Analysis of Fiduciary Duties in the Face of Bankruptcy

In re Ultimate Escapes Holdings, LLC, 682 Fed. Appx. 125 (2017)

In re Ultimate Escapes Holdings, LLC, No. 12-50849 (BLS), 2015 WL 1590132 (Bankr. D. Del. Feb. 5, 2015)

In affirming the decisions of the courts below, the Third Circuit in its Opinion of In re Ultimate Escapes Holdings, LLC not only provides a refresher on Delaware’s entire fairness and business judgment standards; it also sends a comforting signal to officers and directors faced with difficult decisions when a company is in financial distress and on the verge of bankruptcy.

As the merger negotiations continued, UE’s financial situation deteriorated.  An… Read More

In One of Her Honor’s Last Decisions as a Delaware District Court Judge, The Honorable Sue L. Robinson Clarifies the Distinction Between “Advance Payments” and “Payments on Account of an Antecedent Debt”

Pirinate Consulting Group, LLC v. Kadant Solutions Division (In re NewPage Corp.), No. 16-955 (SLR), 2017 WL 2964803 (D. Del. 2017)

In this appeal to the United States District Court for the District of Delaware, Judge Sue L. Robinson examines the distinction between “advanced payments” required under a contract and payments “on account of an antecedent debt” for purposes of section 547(b) of the Bankruptcy Code.

The Litigation Trustee of the NP Creditor Litigation Trust (the “Trustee”) sought to avoid from Kadant Solutions Divisions (“Kadant”) alleged preferential transfers, including a payment in the amount of… Read More