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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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Karen B. Skomorucha Owens, Esq.
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Showing posts in Employment, Retention, Appointment & Compensation

Liquidation Consultants Are Not “Professionals” Requiring Retention Under § 327(a) of the Bankruptcy Code

In re Heritage Home Group LLC, No. 18-11736 (KG), 2018 WL 4684802 (Bankr. D. Del. Sept. 27, 2018) and In re Brookstone Holdings Corp., No. 18-11780 (BLS), 2018 WL 4801890 (Bankr. D. Del. Oct. 1, 2018)

Recently, in the chapter 11 cases of Heritage Home and Brookstone, the United States Trustee (“UST”) objected to the engagement of Gordon Brothers Retail Partners, LLC, Hilco Merchant Resources, LLC (together with Gordon Brothers Retail Partners, LLC, “Hilco”), and SB360 Capital Partners, LLC (“SB360” and together with Hilco, the “Consultants”) to assist the debtors with store closing sales… Read More

Delaware Bankruptcy Court Permits Attorneys’ Fees in Fee Defense, Distinguishing ASARCO and Boomerang Tube

In re Nortel Networks Inc., No. 09-10138 (KG), 2016 WL 932947 (Bankr. D. Del. Mar. 8, 2017)

In the Nortel family of cases, the Delaware Bankruptcy Court sustained, in part, an objection to the attorneys’ fees sought by the Nortel Networks Capital Corporation Bonds Indenture Trustee (the “Indenture Trustee”), slashing its attorneys’ fee request by almost one million dollars.  However, the more noteworthy ruling came when Judge Gross permitted the Indenture Trustee’s attorneys’ fees for defending their fees, distinguishing the Supreme Court’s ruling in ASARCO and the Delaware Bankruptcy Court’s recent ruling in Boomerang Tube. … 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

UPDATE – Insider’s Scoop: Recently Appointed Equity Committee’s Professional Fees Preliminarily Capped by Bankruptcy Court

In re Horsehead Corp., No. 16-10287 (Bankr. D. Del. June 20, 2016) (CSS)

In the Horsehead family of cases, Judge Sontchi ruled, in the context of considering the equity committee professionals’ retention applications, that a preliminary reasonable global cap of $1.75 million on the equity committee’s professional fees was warranted.  See generally Hr’g Tr. 24:17-29:17.  Our previous blog post analyzing the appointment of the equity committee in these cases can be found here.  The Court had stated at a telephonic discovery conference held just a few days prior that it had “serious concerns that the equity committee… Read More

Insider’s Scoop: Bankruptcy Court Grants Motions to Form an Official Equity Committee Due to Dramatic Adjustments to Valuation Over a Short Period of Time

In re Horsehead Corp., No. 16-10287 (Bankr. D. Del. May 2, 2016) (CSS)

In a packed courtroom, full of shareholders appearing pro se, Judge Sontchi granted motions to appoint an official equity committee.  Acknowledging that he was going “out on a limb here from the standpoint on where the law puts me”, Judge Sontchi cautioned that “something doesn’t smell right to the Court.”  Hr’g Tr. 100:17-19, 100:25-101:1.  The Court based its ruling on His Honor’s experience and the “unusual circumstances” attendant to the Debtor’s valuation, which had… Read More

The Insider’s Scoop: Boomerang Tube is the Law in the Delaware Bankruptcy Court

In re Magnum Hunter Resources Corp., Case No. 15-12533 (KG) (Bankr. D. Del. Feb. 26, 2016)

In re Newbury Common Assocs., LLC, Case No. 15-12507 (LSS) (Bankr. D. Del. Feb. 29, 2016)

On February 26, 2016, the Honorable Kevin Gross of the Delaware Bankruptcy Court was asked to weigh in on the attorneys’ fees issue recently addressed in Judge Walrath’s Opinion in Boomerang Tube.  While not ruling on the issue, Judge Gross said that if he was asked to decide the issue, His Honor would be inclined to agree with his colleagues—a reference to not only Judge Walrath’s Opinion,… Read More

The Insider’s Scoop: “Unwise” to Approve Retention of Dechert LLP As Debtors’ Counsel Due to Actual and Potential Conflicts of Interest

In re Newbury Common Assocs., LLC, Case No. 15-12507 (LSS) (Bankr. D. Del. Feb. 12, 2016)

In a bench ruling, Judge Silverstein denied Newbury Common Associates, LLC’s (and its affiliated debtors, the “Debtors”) application to retain and employ Dechert LLP (“Dechert”) as its bankruptcy counsel.  The Court held that Dechert’s prior representation of certain individuals—William Merritt and Thomas Kelly (the “Individuals”)—in a matter related to the Debtors’ bankruptcy, no matter how short in duration or extent, created an actual conflict of interest.  To the extent there was not an actual conflict, the Court held that it was… Read More

The Insider’s Scoop: Boomerang Tube Decision Already Endorsed in Delaware

In re Samson Resources, Corp., Case No. 15-11934 (CSS) (Bankr. D. Del. Feb. 8, 2016)

The Boomerang Tube decision has already been followed by one other Delaware bankruptcy judge.  In a letter ruling in In re Samson Resources Corp., Judge Christopher S. Sontchi agreed with, endorsed, and applied Judge Walrath’s… Read More

Fee Defense Provisions Held Impermissible for Estate Professionals Under Section 328; Argument for Contract Based Exception to ASARCO Rejected

In re Boomerang Tube, Inc.,Case No. 15-11247 (MFW), 2016 WL 385933 (Bankr. D. Del. Jan. 29, 2016)

In this case, the Delaware Bankruptcy Court addressed a question remaining in the wake of the Supreme Court’s ASARCO opinion:  Although fees incurred by debtors’ attorneys in defending challenges to their fees are generally not permitted under section 330 of the Bankruptcy Code, may such fees be approved if they are provided in the attorneys’ retention application under section 328(a)?  See Baker Botts LLP v. ASARCO LLC, 135 S.Ct. 2158 (2015).  In a succinct Opinion, Judge Mary F. Walrath ruled… Read More

Consummated Plan Based Upon Qualified Bid for Equity Received Pursuant to Sale Process Not “Sale Transaction” for Purposes of Investment Banker’s Retention Agreement

In re Hipcricket, Inc., Case No. 15-10104 (LSS), 2015 WL 5728552 (Bankr. D. Del. Sept. 29, 2015)

In this Memorandum Order, Judge Silverstein approved Canaccord Genuity Inc.’s (“Canaccord”) success fee for its work as an investment banker to Hipcricket, Inc. (the “Debtor”) over an objection of Hal L. Baume (the “Distribution Trustee”).  By the terms of Canaccord’s retention, a success fee was due to it unless a proposed buyer provided debtor in possession financing as part of “a contemplated sale transaction” and such sale transaction was consummated.  In this case, the Distribution Trustee asserted that the consummated plan,… Read More