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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

Can A Publication Notice Satisfy Due Process For “An Entire Class Of Claimants That Are So Unknown As To Be Unknown Even To Themselves”?

In re Energy Future Holdings Corp., No. 14-10979 (CSS), 2015 WL 77416 (Bankr. D. Del. Jan. 7, 2015)

In the chapter 11 proceedings of Energy Future Holdings Corp. and its affiliated debtors (the “Debtors”) pending before the Delaware Bankruptcy Court, the Court was asked to establish a bar date for “claims of unknown persons that have yet to manifest any sign of illness from exposure to asbestos” (the “Unmanifested Claims” or the “Unmanifested Claimants”) so that the Debtors and parties participating in the ongoing marketing process of the Debtors could understand the extent and nature… Read More

Tidbits From The Delaware Bankruptcy Court On In Pari Delicto and Equitable Subordination

Lightsway Litig. Servs., LLC v. Yung (In re Tropicana Enter., LLC), Adv. No. 10-50289 (KJC), 2014 WL 6704445 (Bankr. D. Del. Nov. 25, 2014)

In this Memorandum, the Honorable Kevin J. Carey disposes of certain claims against William J. Yung III (“Yung”), the former director and CEO of Tropicana Entertainment LLC (with its affiliated entities, the “Debtors”) and certain entities controlled by Yung, Wimar Tahoe Corporation (“Wimar”), the parent corporation of the Debtors, and Columbia Sussex Corporation (“Columbia” and together with Wimar and Yung, the “Defendants”).  Notably, the Court discusses—albeit briefly—two developing legal concepts in the Third Circuit… Read More

Equitable Subordination Relief Granted; Recharacterization Relief Denied

U.S. v. State Street Bank and Trust Co., as Trustee for Junior Subordinated Secured PIK Notes, et al. (In re Scott Cable Communications, Inc.), Adv. Proc. No. 01-4605 (KJC), 2014 WL 5298031 (Bankr. D. Del. Oct. 15, 2014).

This recent and lengthy 90-page Opinion by the Honorable Kevin J. Carey arises from the chapter 11 proceedings of Scott Cable Communications, Inc. (“Scott Cable” or the “Company”) and concerns an adversary complaint in which the United States of America, on behalf of the Internal Revenue Service (the “Government” or the “IRS”), sought to recharacterize or equitably subordinate… Read More

Bar Date Notice Insufficient For Unknown Creditors Despite Publication Nationally And Locally

White v. Jacobs (In re New Century TRS Holdings, Inc.), No. 13-1719-SLR, 2014 WL 4100749 (D. Del. Aug. 19, 2014)

The central question in this appeal was whether notice of a debtors’ claims bar date was constitutionally sufficient to afford unknown creditors due process.*  Although publication notice of a bar date in national and local newspapers is often deemed sufficient for unknown creditors, the Delaware District Court held that, under the circumstances of this case, the notice was insufficient and vacated the Bankruptcy Court’s ruling.  In so ruling, the District Court observed that “when the bar… Read More

Delaware District Court Holds Subordination Agreements Enforceable to Subordinate Junior Secured Creditor’s Timely Filed Claim to Those Tardily Filed by a Senior Secured Creditor

Bank of New York Mellon Trust Co. v. Miller (In re Franklin Bank Corp.), No. 13-1713-RGA, 2014 WL 3611596 (D. Del. July 21, 2014)

In this Memorandum Opinion, Judge Andrews of Delaware’s District Court vacated an order of the Bankruptcy Court and held that a secured creditor who tardily filed its claims years after the applicable bar date did not waive its ability to enforce subordination agreements to subordinate a junior secured creditor’s timely filed claims.  The District Court further held that, despite the Bankruptcy Court’s contrary ruling, the senior creditor’s failure to… Read More

Bankruptcy Court Disallows Employee’s Claims for Severance Benefits; Debtor’s Interpretation of Employee Benefit Plan Given Deference

In re The PMI Group, Inc., et al., No. 11-13730 (BLS) (Bankr. D. Del. June 23, 2014)

Judge Shannon recently sustained a debtor’s objection to benefits sought by a former employee pursuant to the debtor’s salary continuation plan (the “Salary Continuation Plan”).  The case centered on whether the implementation of insurer solvency protection provisions under the laws of the state of Arizona constituted a “change in control” as defined by the Salary Continuation Plan.

By way of background, The PMI Group, Inc. (the “Debtor”) and its subsidiaries were involved in the residential mortgage industry and thus,… Read More

More Opinions Addressing Pro Se Claimants in New Century TRS Holdings, Inc

Konar v. New Century TRS Holdings, Inc (In re New Century TRS Holdings, Inc), Adv. No. 12-50187 (KJC), 2014 WL 2198247 (Bankr. D. Del. May 23, 2014); In re New Century TRS Holdings, Inc, No. 07-10416, 2014 WL 2511339 (Bankr. D. Del. May 30, 2014) (“Cromwell”); In re New Century TRS Holdings, Inc, No. 07-10416, 2014 WL 2446823 (Bankr. D. Del. May 30, 2014) (“Russell”)

In In re New Century TRS Holdings, Inc, the Honorable Kevin J. Carey has spent significant time adjudicating pro se claimants’ late-filed proofs of claims that assert various alleged injuries relating to their respective mortgages.  In fact, in… Read More

Derivative Standing to Pursue Recharacterization, Equitable Subordination, and Breach of Fiduciary Duty Claims on behalf of Debtors Optim Energy, LLC Denied by Bankruptcy Court

In re Optim Energy, LLC, No. 14-10262 (BLS), 2014 WL 1924908 (Bankr. D. Del. May 13, 2014)

On May 13, 2014, the Honorable Brendan L. Shannon issued an Opinion denying an unsecured creditor’s request for derivative standing to pursue claims on behalf of debtor Optim Energy, LLC (“Optim Energy”) and its affiliated debtors (collectively, the “Debtors”) for recharacterization, equitable subordination, and breach of fiduciary duties against direct and indirect non-debtor owners, ECJV Holdings, LLC (“ECJV”) and Cascade Investments, L.L.C. (“Cascade”).  Walnut Creek Mining Company (“Walnut Creek”), the Debtors’ largest non-insider general unsecured creditor, alleged that the… Read More

IRS Not Required to File Proof of Claim for Certain Taxes Arising From Employee Wages Earned Pre-petition But Paid Post-petition

In re Goody’s LLC, No. 09-10124 (CSS) (Bankr. D. Del. May 13, 2014)

A recent Opinion issued by Judge Sontchi analyzed a motion filed by the debtors in In re Goody’s LLC to enforce plan injunctions and determine liability for certain employment taxes.  The issue in Goody’scentered on the post-petition payment of allowed pre-petition wage claims.  The debtors withheld employment taxes (the “Withheld Amounts”) from the wage payments, filed requisite tax returns, deposited the Withheld Amounts with the Internal Revenue Service (the “IRS”), and requested the IRS to apply the Withheld Amounts to the employees’ federal income and Social… Read More

Bankruptcy Court Awards Substantial Contribution Only to Spansion’s Ad Hoc Committee of Convertible Noteholders

In re Spansion Inc., No. 09-10690 (KJC) (Bankr. D. Del. May 14, 2014)

In this long-awaited Memorandum Order, the Honorable Kevin J. Carey recognized that the Ad Hoc Committee of Convertible Noteholders (the “Ad Hoc Convert Committee”) assisted the Court in determining the enterprise value of Spansion Inc. and its affiliated debtors (the “Debtors”) and thus, allowed a substantial contribution award for the committee’s directly attributable professional fees and expenses.  In the same Order, the Court held that the Ad Hoc Committee of Equity Security Holders of Spansion Inc. (the “Ad Hoc Equity Committee”) was not… Read More