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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 Judge Kevin Gross

Delaware Bankruptcy Court Holds Section 546(e) Safe Harbor Does Not Bar a Litigation Trust, as a Creditor-Assignee, From Asserting State Law Constructive Fraudulent Transfer Claims

PAH Litig. Trust v. Water Street Healthcare Partners, L.P. (In re Physiotherapy Holdings, Inc.), No. 15-51238 (KG), 2016 WL 3611831 (Bankr. D. Del. June 20, 2016)

In rendering this Opinion and permitting a post-confirmation trust to pursue state law constructive fraudulent transfer claims against two former shareholders of debtor Physiotherapy Holdings, Inc. (“Physiotherapy”), the Honorable Kevin Gross of the Delaware Bankruptcy Court eschewed the recent holding of the Court of Appeals for the Second Circuit that section 546(e) of the Bankruptcy Code preempts not only state law fraudulent transfer claims brought by trustees in bankruptcy, but also those brought… Read More

Unredeemed Gift Cards are Not Entitled to Priority Status Under Bankruptcy Code 507(a)(7)

In re City Sports, Inc., No. 15-12054 (KG), 2016 WL 4190090 (Bankr. D. Del. Aug. 4, 2016)

In what the Bankruptcy Court deemed a purely academic issue given the circumstances of the City Sports bankruptcy cases, Judge Gross held that unredeemed gift cards are not entitled to priority status, and instead, are properly classified as general unsecured claims.  In so doing, Judge Gross rejected and disagreed with a previous holding of the Delaware Bankruptcy Court wherein the court found that gift cards fall under the definition of “deposit” and accorded them priority status under the Bankruptcy Code.  See In re WW Warehouse,… Read More

Motion to Transfer Denied, Bankruptcy Court Stresses Adverse Impact of Transfer and Relative Ease of Appearing in Delaware

In re Restaurants Acquisition I, LLC, Case No. 15-12406 (KG), 2016 WL 855089 (Bankr. D. Del. Mar. 4, 2016)

In this Memorandum Opinion, Judge Gross denied a motion to transfer venue to the Bankruptcy Court for the Northern District of Texas brought by the Texas Comptroller of Public Accounts and the Texas Workforce Commission (the “Movants”).  The Court recognized the strong interest in resolving state tax disputes in a local forum, but explained that the analysis must be viewed from the lens of all interested parties, with the primary focus concerning the economic administration of the estate and the impact… 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

Delaware Bankruptcy Court Walks “Interpretive Tightrope” Between Automatic Stay And The Norris-La Guardia Act

In re Trump Entm’t Resorts, Inc., No. 14-12103 (KG) (Bankr. D. Del. July 21, 2015)

Aligning itself with Sixth and Second Circuit law, the Delaware Bankruptcy Court ruled that activities described in, and protected by, the Norris-La Guardia Act (“NLA”) do not constitute violations of the automatic stay under Bankruptcy Code section 362.  Although wrestling to reconcile the two statutes, an anti-injunction labor law on the one hand and a broad bankruptcy-based injunction statute on the other, the Bankruptcy Court relied on the uncontroverted congressional intent that the automatic stay cannot enjoin certain NLA protected activities, and instructed the… Read More

UPDATE – Bankruptcy Court Continues To Urge Nortel Parties To Come To An Agreement

In re Nortel Networks, Inc., Case No. 09-10138 (KG) (Bankr. D. Del. July 6, 2015)

The Delaware Bankruptcy Court heard day-long argument on eight issues raised in motions for reconsideration of the Court’s recent Allocation Opinion—previously discussed here—and issued a Memorandum Order denying reargument on two issues, granting minor clarifications to the Allocation Opinion on four issues, and denying reargument as premature on two issues.  While the Memorandum Order is not all that legally significant, Judge Gross again urges the parties “to discuss how to refine the issues the Movants have raised.  Failing those discussions, the Court… Read More

Prepetition Representation Of Both LLC And Its Sole Member Did Not Disqualify Law Firm From Representing Sole Member In Post-Petition Adversary Proceeding

Stanziale v. MILK072011, LLC (In re Golden Guernsey Dairy, LLC), Adv. No. 14-50953 (KG), 2015 WL 3669932 (Bankr. D. Del. June 12, 2015)

In this Opinion, Delaware Bankruptcy Court Judge Kevin Gross refused to disqualify a law firm under Model Rules of Professional Conduct (“MRPC”) 1.7 and 1.9 from representing the sole member of an LLC in an adversary proceeding where it previously represented both the member company and the LLC in pre-petition unrelated matters.

Golden Guernsey Dairy LLC (the “Debtor”) was a dairy manufacturing business acquired by OpenGate Capital (“OpenGate”) in 2011.  OpenGate formed and controlled “MILK” as… Read More

The Assets of “One Nortel” To Be Allocated Equitably On A Modified Pro Rata Basis

In re Nortel Networks, Inc., Case No. 09-10138 (KG), 2015 WL 2374351 (Bankr. D. Del. May 12, 2015)

In an “unprecedented, complex, and massive dispute involving highly integrated multinational enterprises,” Judge Gross of the Delaware Bankruptcy Court, along with Justice Newbould of the Ontario Superior Court of Justice (Commercial List), issued simultaneous opinions after a truly unique twenty-one day cross-border trial, determining how to allocate $7.3 billion to creditors of Nortel Networks Corporation (“NNC”), the indirect parent of more than 130 subsidiaries, located in more than 100 countries.  Consistent with its unprecedented nature, Judge Gross Read More

Third Circuit’s Hypothetical Test Wins The Day As Bankruptcy Court Grants Donald And Ivanka Trump Relief From The Automatic Stay

In re Trump Entm’t Resorts, Inc., No. 14-12103 (KG), WL (Bankr. D. Del. Feb. 20, 2015)

On February 20, 2015, the Honorable Kevin Gross granted relief from the automatic stay so that Donald and Ivanka Trump (the “Trumps”) may continue their action against Trump Entertainment Resorts, Inc. and certain affiliated debtors (the “Debtors”) seeking to terminate a trademark license agreement (the “Trademark License Agreement”) and remove, among other things, the “Trump” name from the Debtors’ buildings.  Following Third Circuit precedent, Judge Gross ruled that under the “hypothetical test” the Trademark License Agreement could not be assumed or assigned by… Read More

The Insider’s Scoop: Caesars Moving from Delaware to the Northern District of Illinois

In re Caesars Entm’t Operating Co., Case No. 15-10047 (KG) (Bankr. D. Del. Jan. 28, 2015)

On January 28, 2015, in a bench ruling and Order to be followed by a written Opinion, the Honorable Kevin Gross ruled that the voluntary chapter 11 bankruptcy proceeding of Caesars Entertainment Operating Company, Inc. (“CEOC”), that was currently pending but stayed in the United States Bankruptcy Court for the Northern District… Read More