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Showing posts in Judge Mary F. Walrath

Amid Unforeseeable Failed Sale, Debtor Gave Employees Enough WARNing For Layoffs

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

Merely Labeling A Claim “Turnover” Under Bankruptcy Code Section 542 Does Not Always Yield A “Core” Claim

IPC Int’l Corp. v. Milwaukee Golf Shopping Center LLC (In re IPC Int’l Corp.), Adv. No. 14-50333 (MFW), 2014 WL 5544692 (Bankr. D. Del. Nov. 3, 2014)

In this adversary proceeding, Judge Walrath granted a motion to transfer venue, holding that all alleged claims (including a claim for turnover under Bankruptcy Code section 542) were non-core and that the interests of justice and convenience of the parties weighed in favor of transfer.

The IPC proceeding was commenced by the debtor, alleging turnover, breach of contract, and unjust enrichment to recover certain accounts receivable incurred mostly post-petition under a pre-petition services agreement (the… Read More

Bankruptcy Court Allows Sale Free and Clear of Successor Liability Claims

In re Ormet Corp., No. 13-10334 (MFW), 2014 WL 3542133 (Bankr. D. Del. July 17, 2014)

In this Memorandum Opinion, Judge Walrath overruled an objection to a sale of the debtors’ assets free and clear of the objector’s successor liability claim, and granted a stay waiver under Bankruptcy Rules 6004(h) and 6006(d) to allow the sale to close immediately.  In reaching its conclusion, the Court emphasized the integral nature of Bankruptcy Code section 363(f) to the bankruptcy process, enabling debtors to sell assets free and clear of any claims—something not available outside of the bankruptcy… Read More

Subsidiary Can Exercise Actual Control Over Parent Sufficient to Create a Fiduciary Relationship Says Bankruptcy Court

Burtch v. Owlstone, Inc. (In re Advance Nanotech, Inc.), Adv. No. 13-51215 (MFW), 2014 WL 1320145 (Bankr. D. Del. Apr. 2, 2014)

On April 2, 2014, the Honorable Mary F. Walrath issued a Memorandum Opinion denying a motion to dismiss brought by a non-debtor subsidiary challenging breach of fiduciary duty claims asserted by a chapter 7 trustee on behalf of a bankrupt-parent.  In doing so, the Court made an interesting (and perhaps controversial) conclusion – it is possible for a subsidiary to exercise actual control over its parent sufficient to create a fiduciary obligation.

In 2004, Advance… Read More

The Court Adopts The “Receipt Date” For New Value Defense

Giuliano v. Innovative Nationwide Builders, Inc. (In re Ultimate Acquisition Partners LLP), Adv. No. 11-52633 (MFW) (Bankr. D. Del. Jan. 31, 2014)

In this Memorandum Opinion, the Honorable Mary F. Walrath denied the motion for summary judgment of defendant Innovative Nationwide Builders, Inc. filed in response to the Trustee’s preference complaint because material issues of fact existed as to the defenses it asserted.  Although denial of summary judgment on preference claims is routine, in rendering its decision, the Court in Innovativeopined on an unsettled issue within the Third Circuit – namely, how… Read More

Release Provision Interpretation Aggregates Claims in Preference Action

U.S. Bank N.A. v. DHL Global Forwarding (In re Evergreen Solar, Inc.), Adv. No. 13-50486 (MFW), 2014 WL 300965 (Bankr. D. Del. Jan. 28, 2014)

In this short Memorandum Opinion, the Honorable Mary F. Walrath denied the defendant’s motion for summary judgment over preference claims.  In so holding, the Court interpreted a release provision in a settlement agreement to allow the plaintiff to aggregate alleged preferential transfers and only release them, pursuant to the agreement, if the combined amount totaled less than $60,000.

The release provision provided that “all claims for the avoidance… Read More