About This Blog
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.
Judges and Courts
- Delaware Court of Chancery
- Delaware District Court
- Delaware Supreme Court
- Judge Brendan L. Shannon
- Judge Christopher S. Sontchi
- Judge Kevin Gross
- Judge Kevin J. Carey
- Judge Laurie Selber Silverstein
- Judge Mary F. Walrath
- Judge Peter J. Walsh
- Third Circuit Court of Appeals
- United States Supreme Court
- Post-Confirmation Purchasers of Shares Be Aware: Third Circuit Holds Shares are Subject to the Plan, Including Its Releases
- Delaware District Court Agrees That Plans Need Not Reflect Bargained For Priority Provisions in Subordination Agreements
- Liquidation Consultants Are Not “Professionals” Requiring Retention Under § 327(a) of the Bankruptcy Code
Practice Pointers – When Faced With A Dispute Over a Court Order, Seek Court Intervention Sooner Rather Than Later or Face Civil Contempt Sanctions
In this Opinion, Judge Walrath of the Delaware Bankruptcy Court imposed sanctions against the Washington Mutual Liquidating Trust (the “Liquidating Trust”) for its failure to comply with the Court’s final fee order (“Final Fee Order”) that awarded, among other things, a contingency fee (the “Contingency Fee”) to Grant Thornton, LLP (“Grant Thornton”) in connection with certain tax related work it provided postpetition to the Liquidating Trust.
Prepetition, Washington Mutual engaged Grant Thornton to develop a theory to challenge the constitutionality of… Read More
Battle Between Prepetition Lender and Consignor Over Inventory Continues – Bankruptcy Court Holds Parties Cannot Contract to Subject Relationship to UCC
TSA Stores, Inc. v. M J Soffe, LLC (In re TSAWD Holdings, Inc.), No. 16-50364 (MFW), 2017 WL 892329 (Bankr. D. Del. Mar. 6, 2017)
Prior to the petition date, consignment vendor M J Soffe, LLC (“Soffe”) sold approximately $5.4 million of goods to the Sports Authority debtors (the “Debtors”) pursuant to a Pay by Scan Agreement. That agreement expressly provided that the arrangement between Soffe and the Debtors qualified as a “consignment” as such term is defined in section 9-102(a)(20) of the Uniform Commercial Code (“UCC”). During the bankruptcy proceedings the Debtors sold the Disputed Goods, and litigation arose… 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
Stock-Based Compensation “Fits Squarely Within” the Bankruptcy Code’s Definition of “Equity Security”
GSE Envtl., Inc. v. Sorrentino (In re GSE Envtl., Inc.), No. 16-50377 (MFW), 2016 WL 3963978 (Bankr. D. Del. July 18, 2016)
In this Opinion, Judge Walrath ruled that stock-based compensation owed to the former chief executive officer (the “Defendant”) of GSE Environmental, Inc. and GSE Holding, Inc. (the “Debtors”) under his employment agreement constitutes an “equity security”, as that term is defined under the Bankruptcy Code. See Op. at *5; 11 U.S.C. § 101(16).
Defendant’s pre-petition employment agreement provided for monthly compensation in the amount of $186,000, payable in $100,000 of cash and $86,000 of company stock. After the bankruptcy… Read More
Practice Point: Substance Matters – Recent Rulings Confirm and Clarify Pleading Standards under Section 547
THQ, Inc. v. Starcom Worldwide, Inc. (In re THQ, Inc.), No. 14-51079 (MFW), 2016 WL 1599798 (Bankr. D. Del. Apr. 18, 2016).
Giuliano v. Haskett, (In re MCG Ltd. P’ship), No. 14-50536 (CSS), 545 B.R. 74 (Bankr. D. Del. Jan. 28, 2016).
Two recent rulings by the Delaware Bankruptcy Court confirm the well-known pleading standards that a preference complaint must do more than “merely parrot the language of section 547” to survive a motion to dismiss. The cases also clarify the type of particularized facts that must be alleged to state a claim under section 547.
In THQ, Inc. v. Starcom Worldwide, Inc…. 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
No “Related to” Jurisdiction Despite Stipulation and Bankruptcy Court Order Governing the Non-Debtor Parties’ Rights and Responsibilities
Seagate Tech. (US) Holdings, Inc. v. Global Kato HG, LLC (In re Solyndra, LLC), 2015 WL 6125246 (MFW) (Bankr. D. Del. Oct. 16, 2015).
In this Memorandum Opinion, Judge Mary Walrath of Delaware’s Bankruptcy Court granted a motion to dismiss an adversary proceeding between two non-debtor parties based on lack of subject matter jurisdiction, and also remanded similar litigation between the parties back to California state court. Among other things, the Court concluded that an order issued by the Bankruptcy Court approving a stipulation did not confer subject matter jurisdiction over a proceeding between two non-debtors alleging state… Read More
Underwater Lender Could Not Be Compelled To Accept Money Satisfaction Of Its Property Interests; Sale Free And Clear Under 363(f) Denied
In re Ferris Props., Inc., No. 14-10491 (MFW), 2015 WL 4600248 (Bankr. D. Del. July 30, 2015)
On July 30, 2015, the Delaware Bankruptcy Court denied a debtors’ request to sell properties free and clear of liens and encumbrances pursuant to section 363(f) of the Bankruptcy Code, holding that the mortgagee, whose claim would not be paid in full from the sale proceeds, could not be compelled to accept a money satisfaction of its interests in the properties and did not consent to the sale. A debtor may sell property free and clear of any interest in such… Read More
Court Addresses Standards for Insolvency, Piercing the Corporate Veil Under Delaware Law, Avoiding Alleged Fraudulent Transfers, and More
Burtch v. Opus, LLC (In re Opus East, LLC), Adv. Proc. No. 11-52423 (MFW), 2015 WL 1404959 (Bankr. D. Del. March 23, 2015)
In this Opinion, Judge Mary F. Walrath addressed 67 counts brought by a chapter 7 trustee (the “Trustee”) against former fiduciaries of the debtor and related business entities. The Trustee alleged theories of piercing the corporate veil, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, successor liability, avoidance of fraudulent and preferential transfers, unjust enrichment, disallowance and equitable subordination of claims, revocation of certificate of dissolution, imposition of constructive trust, tortious interference… Read More
Varela v. Eclipse Aviation Corp. (In re AE Liquidation, Inc.), Adv. No. 09-50265 (MFW), 2014 WL 6460805 (Bankr. D. Del. Nov. 18, 2014)
Eclipse Aviation Corporation (“Eclipse”) engineered, manufactured, and sold jet aircrafts. In 2008, Eclipse defaulted on its secured notes. Its board of directors contemplated liquidation, but eventually decided on a sale as a going-concern through Bankruptcy Code section 363 to Eclipse’s largest shareholder, European Technology and Investment Research Center (“ETIRC”). ETIRC funded the Eclipse bankruptcy with $20 million in debtor-in-possession financing. ETIRC later emerged as the stalking horse bidder, financed through a Russian state-owned bank. On January 23,… Read More