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Showing posts in 9019 Settlements

Plan Confirmation Principles Not Categorically Applied in the Settlement Context

In re Energy Future Holdings, Corp., No. 15-1591, 2016 WL 2343322 (3d Cir. May 4, 2016)

The Third Circuit recently determined that a settlement in the form of a tender offer did not violate the Bankruptcy Code and was within the Bankruptcy Court’s discretion to approve.  In its ruling, the Court examined whether principles applicable to a plan of reorganization, such as the “equal treatment” rule embodied in 11 U.S.C. § 1123(a)(4), must be categorically applied in the settlement context, and found there is no such requirement.  Nonetheless, the Court affirmed the lower courts’ ruling on the grounds that… Read More

Third Circuit Allows 363 Purchaser’s Funds to Bypass IRS and Satisfy Certain Administrative and General Unsecured Claims

In re ICL Holding Company, Inc., No. 14-2709, 2015 WL 5315604 (3d Cir. Sept. 14, 2015), aff’g sub nom United States v. LCI Holding Co., Inc., Nos. 13-924 (SLR), 13-1188 (SLR), 2014 WL 975145 (D. Del. March 10, 2014)

As discussed by the Delaware Bankruptcy Insider in March of last year, in ruling on a motion for stay the Delaware District Court determined that the Delaware Bankruptcy Court did not err when it approved a sale of substantially all of the assets of LCI Holding Company, Inc. and its affiliated debtors (the “Debtors”) and a settlement between the purchaser (the Debtors’… Read More

Third Circuit Approves of Structured Dismissals That Deviate From the Bankruptcy Code’s Priority Scheme – But Only in Rare Cases

Official Comm. of Unsecured Creditors v. CIT Group/Business Credit, Inc. (In re Jevic Holding Corp.), No. 14-1465, 2015 WL 2403443 (3d Cir. May 21, 2015)

The Third Circuit Court of Appeals (the “Third Circuit”) answered a novel question of bankruptcy law in the affirmative—whether a chapter 11 case can ever be resolved in a “structured dismissal” (a disposition that winds up the bankruptcy with certain conditions attached instead of simply dismissing the case and restoring the status quo ante) that deviates from the priority scheme of the Bankruptcy Code.  In rare cases, the Bankruptcy… Read More

EFH Debtors’ First Lien Settlement and Related Tender Offer Upheld by District Court

Delaware Trust Co. v. Energy Future Immediate Holdings, LLC (In re Energy Future Holding Corp.), No. 14-723 (RGA) (D. Del. Feb. 19, 2015)

Energy Future Holding Corporation and its subsidiaries (the “Debtors”) commenced their chapter 11 proceedings with a series of settlements (together, the “Global Settlement”) reached with certain key creditor constituencies.  Although the Global Settlement was later withdrawn in large part, the Debtors sought and obtained Bankruptcy Court approval of their settlement (“First Lien Settlement”) reached with the $4 billion first lien noteholders of debtor Energy Future Intermediate Holdings, LLC.  Pursuant to the First Lien Settlement,… Read More

9019 Settlement Constituted Plan Modification; Third Circuit Remands to Bankruptcy Court For Consideration Under Section 1127

In re SCH Corp., No. 14-2888, 2015 WL 756552 (3d Cir. Feb. 24, 2015)

In April, the District Court affirmed an oral ruling of the Bankruptcy Court issued in the In re SCH Corp. post-confirmation bankruptcy proceedings, approving under Bankruptcy Rule 9019 and the Martin factors a post-confirmation settlement (the “Settlement”) reached between the debtors’ post-confirmation “Responsible Officer” and a subsidiary (“NCG”) of the debtors’ plan proponent and sponsor, secured lender, and asset acquirer (“LLCP”).  Our analysis of that ruling can be found here.  In this recent Opinion of the Third Circuit, the Court of Appeals vacated the District… Read More

Practice Point: District Court Weighs in on Submission of Orders Under Certification of Counsel

Burtch v. Avnet, Inc., No. 13-060-LPS, 2015 WL 24318  (D. Del. Jan. 16, 2015)

This District Court Memorandum Order offers a cautionary tale to practitioners as to the proper—and often improper—use of certifications of counsel.

Avnet, Inc. (“Avnet”) filed a motion to enforce a stipulation whereby the Debtors would segregate Avnet’s purchase-money collateral in a sale of assets to Laurus Master, Ltd. (“Laurus”).  A Notice of Agenda of Matters was circulated two days before a scheduled hearing, indicating that the enforcement motion was the only contested matter going forward but Avnet, Laurus and the Debtors were actively attempting to resolve… Read More

State Law Enforceability of Post-Confirmation Settlement Agreement Not Dispositive; Bankruptcy Court Considers Bankruptcy Rule 9019 Standard

In re Filene’s Basement, LLC, No. 11-13511 (KJC), 2014 WL 1713416 (Bankr. D. Del. Apr. 29, 2014)

On April 29, 2014, the Honorable Kevin J. Carey issued another Memorandum in connection with the on-going disputes in the bankruptcy proceedings of reorganized Filene’s Basement, LLC and its affiliated reorganized debtors (collectively, the “Reorganized Debtors”) regarding a lease of non-residential real property located in Secaucus, New Jersey (the “Lease”). Unlike Judge Carey’s prior decisions that determined a claim to percentage rent under the Lease (an analysis of which may be found here), the issues presented to His Honor in… Read More

Bankruptcy Court’s Careful Consideration of Settlement’s Broad Benefit Recognized by District Court

CFI Class Action Claimants v. Singley (In re SCH Corp.), No. 12-1576 (SLR), 2014 WL 1340234 (D. Del. Apr. 2, 2014)

On April 2, 2014, the Honorable Sue L. Robinson of the District Court affirmed an oral ruling of the Bankruptcy Court, approving a post-confirmation settlement reached between SCH Corp., American Corrective Counseling Services, Inc., and ACCS Corp. (together, the “Debtors”) and Carl Singley (“Singley”) (the disbursing agent, litigation designee, and responsible officer for the Debtors), on one hand, and Levine Leichtman Capital Partners III, L.P. (“LLCP”) (the Debtors’ prepetition secured lender and acquirer… Read More

Debtors’ Funds Purchased in Section 363 Sale Permitted to be Disbursed to Debtors’ Administrative and Unsecured Creditors Over IRS Objections

United States v. LCI Holding Co., Inc., Nos. 13-924 (SLR), 13-1188 (SLR), 2014 WL 975145 (D. Del. March 10, 2014)

On March 10, 2014, Judge Sue L. Robinson of the District Court denied the request of the United States, on behalf of the Internal Revenue Service (the “IRS”), to stay disbursement of funds placed into escrow by a purchaser of debtor-assets intended to satisfy some but not all administrative and unsecured claims asserted against the debtors.  During the chapter 11 bankruptcy cases of LCI Holding Company, Inc. and its affiliated debtors (the “Debtors”), the Debtors’ prepetition… Read More

Third Circuit Upholds Bankruptcy Court’s Approval of 9019 Settlement – Acknowledges Court’s Bank of Knowledge Gathered Throughout a Bankruptcy Case

Mangano v. ID Liquidation One, LLC (f/k/a Indianapolis Downs, LLC), No. 13-3386, 2014 WL 6155944 (3d Cir. Feb. 19, 2014)

In this non-precedential Opinion, the Third Circuit was faced with an appeal of an order entered by the District Court, affirming a Bankruptcy Court order, pursuant to Bankruptcy Rule 9019, approving a settlement between a set of long-standing litigants – the debtors, Indianapolis Down, LLC (n/k/a ID Liquidation One, LLC) and Indiana Downs Capital Corp. (n/k/a ID Liquidation Two, Inc.) (collectively, the “Debtors”), on one hand, and Power Plan Entertainment Casino Resorts… Read More