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The Delaware Bankruptcy Insider is a premier blog designed to bring its readers a comprehensive analysis of the latest Delaware corporate bankruptcy news and rulings.  Brought to you by Ashby & Geddes, P.A.

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Showing posts in Claims

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)

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 possession, AWI’s customers remitted payment for the goods to AWI, which then remitted payment to BBU after retaining a percentage.  BBU filed a large… 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

Committee Professionals’ Carve-Out in DIP Financing Order Not Per Se Limit on Fees

In re Molycorp, Inc., No. 15-11357(CSS), 2017 WL 56703 (Bankr. D. Del. Jan. 5, 2017)

In this Opinion, Judge Sontchi found, among other things, that an unambiguous carve-out provision of a debtor-in-possession financing order (the “DIP Financing Order”) did not cap the professional fees and expenses of the Official Committee of Unsecured Creditors (the “Committee”) given that a plan of reorganization was confirmed.  Moreover, because the Committee’s professional did not agree to different treatment, its fees and expenses were administrative expenses that must be paid in full.

In Molycorp, the Committee, the debtor Molycorp, Inc. (the “Debtor”), and the DIP… Read More

Lack of “Scientific Certainty” Does Not Excuse Late Filing of a Proof of Claim

In re W.R. Grace & Co., No. 01-1139 (KG) (Bankr. D. Del. Dec. 28, 2016)

In this Opinion involving the standards for determining whether a party held an asbestos claim and excusable neglect for filing a late claim, the Court rejected Plum Creek Timber Co.’s (the “Claimant”) argument that it lacked “scientific certainty” with respect to its asbestos-related claim against W.R. Grace & Co. (together with its affiliated debtors, the “Debtors”).  Where the Claimant received actual and publication notice of the bar date in the case, the Court found the Claimant should have timely filed its claim even if… Read More

Satisfaction of a Prepetition Loan by a DIP Loan Does Not Extinguish Vendor’s Reclamation Rights Under Section 546(c)

In re Reichhold Holdings US, Inc., No. 14-12237 (MFW), 2016 WL 4479286 (Bankr. D. Del. Aug. 24, 2016)

In this Memorandum Opinion, the Court overruled a limited reclamation claims objection asserted by a liquidating trustee, who argued that a creditor’s reclamation rights were cut-off by a postpetition loan that refinanced a prior perfected prepetition loan.  In doing so, the Court sided with the Sixth Circuit Court of Appeals and rejected a line of cases from the Bankruptcy Court for the Southern District of New York.

After Reichhold Holdings US, Inc. (the “Debtor”) filed its chapter 11 petition, Covestro LLC… Read More

Pac Sun Class Representative Denied Permission to File Class Proof of Claim on Behalf of Priority Claimants

In re Pacific Sunwear of California, Inc., No. 16-10882 (LSS) (Bankr. D. Del. June 22, 2016 and Aug. 8, 2016)

In the first of two related Opinions, Judge Laurie Selber Silverstein granted claimant Tamaree Beeney permission to file a class proof of claim for alleged violations of California wage and hour laws under California’s Private Attorney General Act (“PAGA”), but limited her representative role to absent class members who hold non-priority general unsecured claims.  In the second Opinion, the Court denied reconsideration of Her Honor’s ruling and further disallowed another claimant from representing the priority class in… Read More