Getting Noticed in the Digital Age: Delaware Bankruptcy Court Finds Email Notice Satisfies Due Process but Not Rule 2002

In re Cyber Litigation Inc., 2021 WL 4927550 (Bankr. D. Del. Oct. 21, 2021)

In this Memorandum Opinion, Judge Goldblatt of the Delaware Bankruptcy Court considered whether a bar date notice sent via email to the principal of an unsecured creditor was sufficient to disallow the creditor’s untimely proof of claim. The Court ultimately concluded that the email notice comported with constitutional due process standards but did not meet the requirements of Bankruptcy Rule 2002, which instructs that such notices be provided to creditors by mail. As a result, the debtor’s timeliness objection was… Read More

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

“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

Delaware District Court Finds Section 506(b) Does Not Limit Allowability of Unsecured Claims for Contractual Postpetition Attorneys’ Fees

Wilmington Trust Co. v. Tribune Media Co. (In re Tribune Media Co.), No. 15-0116 (RGA), 2018 WL 6167504 (D. Del. Nov. 26, 2018)

In a short Memorandum Order, the Delaware District Court reversed the Delaware Bankruptcy Court’s November 19, 2015 ruling issued in the chapter 11 cases of Tribune Media Company and its affiliated debtors disallowing an indenture trustee’s unsecured claim for postpetition attorneys’ fees arising under the express terms of the governing indenture.  As previously analyzed by the Delaware Bankruptcy Insider, the Bankruptcy Court acknowledged that the allowability under section 502(b) of the… Read More

Third Circuit Upholds Bankruptcy Court’s Reconsideration Order Described by Dissent as “Troubling – If Not Dangerous – Precedent”

NextEra Energy, Inc. v. Elliott Associates, L.P. (In re Energy Future Holdings Corp.), No. 18-1109, 2018 WL 4354741 (3d Cir. Sept. 13, 2018), aff’g sub nom. 575 B.R. 616 (Bankr. D. Del. 2017)

In this precedential Opinion, the United States Court of Appeals for the Third Circuit (the “Third Circuit”) upheld the decision of the Delaware Bankruptcy Court reconsidering, and thereby denying, a previously approved $275 million termination fee (the “Termination Fee”) to a potential purchaser (NextEra Energy, Inc. (“NextEra”)) in the chapter 11 bankruptcy cases of Energy Future Holdings Corp. and its affiliated debtors (the “Debtors”). … Read More

Anti-Assignment Clauses Enforced to Void and Nullify Claims Purchases

In re Woodbridge Group of Cos., LLC, No. 17-12560 (KJC), 2018 WL 3131127 (Bankr. D. Del. June 20, 2018)

Prior to the commencement of the Woodbridge chapter 11 bankruptcy cases, one of the many debtors (“Woodbridge”) issued three promissory notes, each containing an anti-assignment clause.  The clause prohibited the lenders from assigning the notes, the related loan agreements, and any other instruments executed in connection therewith absent the written consent of Woodbridge.  If a non-consensual assignment was attempted, the provision provided that the assignment would be null and void.  Similar language existed in the related loan agreements… Read More

The Bar Date Is Like A Statute Of Limitations; It Must Be Followed

In re Nortel Networks Inc., No. 09-10138 (KG), 2017 WL 2821535 (Bankr. D. Del. June 29, 2017)

In this Opinion, the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) rendered a seemingly “harsh” decision necessitated by the “unreasonable relief” requested.  Op. at 16.  Seven years after the September 30, 2009 deadline to file proofs of claim (the “Bar Date”), SNMP Research International, Inc. (“SNMPRI”) and SNMP Research, Inc. (“SNMPR”, and together with SNMPRI, “SNMP”) moved for authority for SNMPRI to file amended proofs of claim and an order adding SNMPR… Read More

Decisions by Third Circuit and Delaware Bankruptcy Court Clarify that “Receipt” under Section 503(b)(9) Requires Physical Possession

Haining Wansheng Sofa Co., Ltd. v. World Imports Ltd. (In re World Imports, Ltd. et al.), No. 16-1357, 2017 WL 2925429 (3d Cir. Mar. 8, 2017) and In re SRC Liquidation, LLC, No. 15-10541 (BLS), 2017 WL 2992718 (Bankr. D. Del. July 13, 2017)

In two recent Opinions, the Third Circuit Court of Appeals and the Delaware Bankruptcy Court clarified that the word “received” in section 503(b)(9) of the Bankruptcy Code requires a showing that goods were delivered into the physical possession of a debtor or its agent within the 20 days before a debtor’s petition date (the “20-Day Period”).  Under the… Read More

Bankruptcy Court Fails to Find Wholesaler-Debtor Constructively Received Goods Delivered to Third Parties Twenty Days Before Bankruptcy; 503(b)(9) Claim Reclassified

In re ADI Liquidation, Inc., No. 14-12092 (KJC), 2017 WL 2712287 (Bankr. D. Del. June 22, 2017), aff’d Bimbo Bakeries USA, Inc. v. AW Liquidation, Inc. (In re ADI Liquidation, Inc.), No. 17-903 (CFC), 2019 WL 211528 (D. Del. Jan. 16, 2019)

In this Opinion, the Delaware Bankruptcy Court examined whether a debtor, formerly known as Associated Wholesalers, Inc. (“AWI”), constructively received goods that were ordered by and delivered to its customers from claimant, Bimbo Bakeries USA, Inc. (“BBU”) during the twenty day period prior to AWI’s petition date (the “Twenty Day Goods”).  While the goods were never in AWI’s physical… Read More

Delaware Bankruptcy Court Finds Debtor Did Not Properly Terminate Contract, Faces Significant Breach of Contract Damages

In re Outer Harbor Terminal, LLC, No. 16-10283 (LSS), 2017 WL 696676 (Bankr. D. Del. Feb. 21, 2017)

In the context of a claims objection, the Court adhered to unambiguous contract language in determining that the presence of a termination triggering event did not automatically terminate a contract, opening the door for potentially significant damages.  This matter will now proceed to the damages phase, where the non-debtor contract counterparty has alleged in its proof of claim an approximate $13.3 million in, among other things, breach of contract damages.

Outer Harbor Terminal, LLC (the “Debtor”) provided stevedoring services—docking and loading/unloading… Read More