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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 Delaware District Court

Delaware District Court Agrees That Plans Need Not Reflect Bargained For Priority Provisions in Subordination Agreements

Law Debenture Trust Co. et al. v. Tribune Media Co. (In re Tribune Media Co.), 587 B.R. 606 (D. Del. 2018)

In this Memorandum, the Delaware District Court upheld the decision of the Delaware Bankruptcy Court to confirm the plan of reorganization (the “Plan”) of Tribune Media Company (“Tribune”) and its debtor affiliates (collectively, the “Debtors”), despite the fact that the distributions proposed therein on account of certain claims infringed on prepetition subordination agreements.  In rendering the decision, Judge Sleet agreed with Judge Sontchi’s lower court opinion that the strict enforcement of subordination agreements, including provisions therein… Read More

Delaware District Court Affirms Confirmation Order Approving Horizontal Gift Providing Disparate Treatment to Separate Classes of General Unsecured Claims

Hargreaves v. Nuverra Envtl. Solutions, Inc. (In re Nuverra Envtl. Solutions, Inc.), No. 17-1024 (RGA), 2018 WL 3991471 (D. Del. Aug. 21, 2018)

In this Opinion, the Delaware District Court (the “District Court”) dismissed an appeal of the Delaware Bankruptcy Court’s order confirming the plan of reorganization (the “Plan”) of Nuverra Environmental Solutions, Inc. and its affiliated debtors (the “Debtors”).  While the appeal was dismissed on the basis of equitable mootness, the District Court took an extra step and affirmed the entry of the confirmation order.  In doing so, the District Court addressed the propriety of “horizontal… Read More

Practice Pointers: Bankruptcy Court Lacks Authority to Transfer Pursuant to 28 U.S.C. § 1631 and A Post-Petition Action Satisfies “Is Commenced” Element for Purposes of Mandatory Abstention

Troisio v. Erickson (In re IMMC Corp.), No. 15-1043 (GMS), 2018 WL 259941 (D. Del. Jan. 2, 2018)

In this Opinion from the Delaware District Court, Judge Sleet affirmed the Bankruptcy Court’s decision denying a liquidating trustee’s motion pursuant to 28 U.S.C. § 1631 to transfer an adversary proceeding to the United States District Court for the Eastern District of Pennsylvania. Relying on plain statutory language, the District Court found that the Bankruptcy Court lacked transfer authority under 28 U.S.C. § 1631 – which limits transfer power to only the courts listed in section 610 – because… Read More

Lease Profit Sharing Provisions Held Per Se Unenforceable Under 11 U.S.C. § 365(f)(1)

Antone Corp. v. Haggen Holdings, LLC (In re Haggen Holdings, LLC), No. 15-1136 (GMS), 2017 WL 3730527 (D. Del. Aug. 30, 2017)

In this Opinion, Judge Sleet of the Delaware District Court affirmed the holding of Judge Gross of the Delaware Bankruptcy Court that profit sharing provisions contained in leases are per se unenforceable anti-assignment provisions under section 365(f)(1) of the Bankruptcy Code.  The provision at issue on appeal entitled the landlord to fifty percent of any “net profits” of the subject lease should the debtor-tenant assign it.  In connection with its proposed sale in… 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

In One of Her Honor’s Last Decisions as a Delaware District Court Judge, The Honorable Sue L. Robinson Clarifies the Distinction Between “Advance Payments” and “Payments on Account of an Antecedent Debt”

Pirinate Consulting Group, LLC v. Kadant Solutions Division (In re NewPage Corp.), No. 16-955 (SLR), 2017 WL 2964803 (D. Del. 2017)

In this appeal to the United States District Court for the District of Delaware, Judge Sue L. Robinson examines the distinction between “advanced payments” required under a contract and payments “on account of an antecedent debt” for purposes of section 547(b) of the Bankruptcy Code.

The Litigation Trustee of the NP Creditor Litigation Trust (the “Trustee”) sought to avoid from Kadant Solutions Divisions (“Kadant”) alleged preferential transfers, including a payment in the amount of… Read More

Stern Requires More Than Subject Matter Jurisdiction, Bankruptcy Court Must Also Have Constitutional Adjudicatory Authority to Approve Nonconsensual Third-Party Releases in a Plan

Opt-Out Lenders v. Millennium Lab Holdings II, LLC, No. 16-110-LPS, — F.Supp.3d —, 2017 WL 1032992 (D. Del. Mar. 17, 2017) corrected and superseded by 2017 WL 1064997 (D. Del. Mar. 20, 2017)

In this Opinion, the United States District Court for the District of Delaware (the “District Court”) examines the bankruptcy court’s authority post-Stern v. Marshall, 131 S. Ct. 2594 (2011), to enter a final order releasing and permanently enjoining a non-debtor’s state law fraud and federal RICO claims against non-debtors absent consent.  Following two recent United States Supreme Court cases—Stern and Wellness Int’l Network, Ltd. v…. Read More

Delaware District Court’s Amended Local Rules Become Effective August 1, 2016

On August 1, 2016, the newly amended Local Rules of Civil Practice and Procedure of the United States District Court for the District of Delaware will go into effect.  Of particular importance to bankruptcy practitioners, the Delaware District Court has made it clear through the local rule amendments that bankruptcy appeals are not subject to Local Rules 7.1.2 (setting forth, among other things, the timetable for motion practice), 7.1.3 (prescribing the form and contents of briefing and appendices filed with the Delaware District Court), 7.1.4 (governing oral argument), and 7.1.5 (governing reargument requests).  Rather those subject areas are governed… 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

Who Has Standing to Raise a Potential Conflict of Interest and an Objection to a Firm’s Retention?

Hofmeister v. Official Comm. of Unsecured Creditors (In re Revstone Indus., LLC), No. 13-565 (SLR), 2015 WL 5618890 (D. Del. Sept. 24, 2015)

In this Delaware District Court Memorandum affirming the decision of the Delaware Bankruptcy Court to permit the retention of counsel (“Committee Counsel”) to the Revstone debtors’ official committee of unsecured creditors (the “Committee”), the Court addressed who may object to a retention application and press an asserted conflict of interest.  In Hofmeister, Mr. Hofmeister, former founder and insider of Revstone, objected to the retention of Committee Counsel, asserting that counsel had a conflict of interest because it… Read More