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

On a Mission: Supreme Court Clarifies Effect of Rejection of Executory Contract

Mission Prod. Hldgs., Inc. v. Tempnology, LLC, No. 17-1657 (2019).

In Mission Prod. Hldgs., Inc. v. Tempnology, LLC, the United States Supreme Court resolved a long-standing Circuit Court split in holding that a debtor’s rejection of an executory contract does not eliminate a contract counterparty’s right to use certain debtor trademarks provided thereunder.  Rather, according to the Court, following the debtor’s rejection of such contract, the counterparty retains the rights it received pursuant to the terms of the underlying agreement and applicable nonbankruptcy law.

Generally, Mission Product Holdings, Inc. (“Mission”) entered into a contract with Tempnology,… Read More

Delaware Bankruptcy Court Finds It Has Constitutional Adjudicatory Authority to Enter a Final Confirmation Order Containing Nonconsensual Third Party Releases

In re Millennium Lab Holdings II, LLC, No. 15-12284 (LSS), 2017 WL 4417562 (Bankr. D. Del. Oct. 3, 2017), aff’d by Opt-Out Lenders v. Millennium Lab Holdings II, LLC (In re Millennium Lab Holdings II, LLC), No. 17-1461 (LPS), 2018 WL 4521941 (Bankr. D. Del. Sept. 21, 2018)

Following the United States Supreme Court’s ruling six years ago in Stern v. Marshall, 131 S. Ct. 2594 (2011), the constitutional adjudicatory authority of bankruptcy courts to enter final orders has been challenged in a variety of proceedings, leading to varied interpretations of the reach of the Stern decision.  In Millennium, the Delaware Bankruptcy Court was asked Read More

“One Nortel” Inches Closer to Final Adjudication of the Allocation Decision—Direct Certification to the Third Circuit Granted

In re Nortel Networks Inc., No. 15-624 (LPS), 2016 WL 2899225 (D. Del. May 17, 2016)

After the Court of Appeal for Ontario denied any further appeal of the Allocation Decision in the Canadian proceeding as a “barrier to progress”, the Delaware District Court, acting sua sponte, directed the parties to submit letter briefs on the issue of whether the District Court should grant direct certification to the Third Circuit.  Having both the benefit of the Ontario Court’s denial of further appeals, and the appeals themselves, Chief Judge Stark granted certification of an appeal of the Allocation Decision to… Read More

Non-Consensual Third Party Releases Certified Directly to the Third Circuit

In re Millennium Lab Holdings II, LLC, No. 15-12284 (LSS), 2016 WL 155500 (Bankr. D. Del. Jan. 12, 2016)

The Delaware Bankruptcy Court has granted direct certification of a hot-button issue surrounding confirmation of plans in bankruptcy to the Third Circuit Court of Appeals—namely, whether a bankruptcy court has the authority to release a non-debtor’s direct clams against other non-debtors without the consent of… Read More

District Court Grants Direct Certification on Question of Whether Bankruptcy Courts Have Power to Transfer Cases under 28 U.S.C. § 1631

Troisio v. Erickson (In re IMMC Corp.), Civ. No. 15-1043 (GMS), 2016 WL 356026 (D. Del. Jan. 28, 2016)

The District of Delaware in this case granted direct certification to the Third Circuit on the question, “whether bankruptcy judges have the authority to order a transfer of an adversary proceeding pursuant to 28 U.S.C. § 1631.”  Op. *4-5.  The issue is whether a bankruptcy court is a “court” as defined in 28 U.S.C. § 610 that is authorized under 28 U.S.C. § 1631 to transfer a civil action to another court for want of jurisdiction.  Determining that the definition… 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

“Ain’t Over Till It’s Over”: SCOTUS Holds Denial of Plan Confirmation Absent Dismissal of the Case Not a Final, Appealable Order

Bullard v. Blue Hills Bank, 575 U.S. ___ (2015)

On May 4, 2015, the Supreme Court of the United States delivered a unanimous Opinion, penned by Chief Justice Roberts, holding that an order denying confirmation but not dismissing a bankruptcy case is not a “final” order that the debtor can immediately appeal.  In so holding, the Supreme Court held that the relevant “proceeding” is the entire process of considering plans for confirmation and if the debtor has the opportunity to propose another plan, the order denying confirmation is not final and not immediately appealable as a matter of… Read More

Practice Point: Direct Appeals to the Third Circuit When A Majority Of Appellants And Appellees Agree

Stanziale v. Car-Ber Testing, Inc. (In re Conex Holdings, LLC), — B.R. —- (D. Del. Mar. 23, 2015)

This Memorandum involves a request for direct appeal from a Bankruptcy Court Order granting summary judgment in favor of Car-Ber Testing, Inc. (the “Appellee”) on its new value defense to certain preferential payments received from Conex Holdings, LLC (with its affiliated entities, the “Debtors”).  Delaware’s District Court denied the request of the chapter 7 trustee (the “Appellant”) despite Appellee joining in the request, ruling that Appellant had not shown that (i) no controlling authority or matter of public importance existed; (ii)… Read More