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Showing posts in Third Circuit Court of Appeals

Transferee’s Knowledge of Debtor’s Intent Not Relevant For Fraudulent Transfer Claim For Actual Intent To Defraud

SB Liquidation Trust v. Preferred Bank (In re Syntax-Brillian Corp.), Nos. 13-1373, 13-1959, 2014 WL 3893292 (3d Cir. Aug. 11, 2014)

In these consolidated appeals stemming from a 2011 Bankruptcy Court decision, the Third Circuit vacated the Bankruptcy Court’s dismissal of certain fraudulent transfer claims against appellee Preferred Bank because the debtor’s intent determines whether a fraudulent transfer claim may be maintained, not the transferee-defendant’s knowledge of the debtor’s intent.  However, the Court affirmed the Bankruptcy Court’s dismissal of all other claims.

The Third Circuit and Bankruptcy Court Opinions detail an alleged fraudulent scheme by certain… Read More

Third Circuit Affirms Bankruptcy Court’s Excision of Inadequately Disclosed Third-Party Release From Plan of Reorganization

In re Lower Bucks Hosp., 2014 WL 2981215 (3d Cir. July 3, 2014)

In this Opinion, the Third Circuit held that non-consensual third-party releases were correctly severed from a proposed plan of reorganization because of significant disclosure deficiencies.  In doing so, the Court reminds all practitioners of a hallmark of plan drafting and solicitation—that “ailure to do so in a clear and conspicuous manner risks excision of the release from the plan.”  Because… Read More

Third Circuit in SCH Corporation and Delaware District Court in Tribune Emphasize the Importance of Examining the Relief Sought by Appellants When Deciding An Appeal Equitably Moot

In re SCH Corp., 2014 WL 2724606 (3d Cir. June 17, 2014); Wilmington Trust Co. v. Tribune Co. (In re Tribune Co.), 2014 WL 2797042 (D. Del. June 18, 2014) (consolidated appeals)

In In re Semcrude, L.P., 728 F.3d 314 (3d Cir. 2013), the Third Circuit discussed the analytical framework for evaluating the well-known equitable mootness factors: “(1) whether the reorganization plan has been substantially consummated,… Read More

Third Circuit Affirms Confirmation of Plan with Reasonable Classification Scheme and Secured Creditor’s Right to Vote Subordinated Debt

In re Coastal Broadcasting Sys., Inc., 2014 WL 2808260 (3d Cir. June 23, 2014)

On June 23, 2014, the Third Circuit Court of Appeals issued an Opinion affirming the Delaware District Court’s decision to affirm confirmation of a chapter 11 plan of reorganization.  In doing so, the Court upheld the enforceability of a voting assignment in a subordination agreement that arose from a pre-petition out-of-court restructuring.

Prior to its bankruptcy filing, Coastal Broadcasting Systems, Inc. (“Coastal”) effectuated an out-of-court restructuring whereby the company redeemed the shares of two shareholders (the “Appellants”) in exchange for a $1.7… Read More

Third Circuit Upholds Voluntary Dismissal Order Challenged by Defendant

Carroll v. Prosser (In re Innovative Commn’c Corp.), No. 13-1324, 2014 WL 1979309 (3d Cir. May 16, 2014)

This Opinion issued by the Third Circuit on May 16, 2014 affirmed several orders of the District Court of the Virgin Islands relating to a fraudulent transfer action brought by the chapter 11 trustee of the Innovative Communication Corporation debtors (“ICC”) against Dawn Prosser.  Ms. Prosser became the subject of the action following her receipt of ICC property transferred from her husband Jeffrey Prosser, the ultimate owner and sole member of ICC.  Although a significant portion of the decision… Read More

Third Circuit Holds That Bankruptcy Code Section 502(e)(1)(B) Can Be Applied to Disallow Claims Against a Post-Confirmation Liquidation Trust

In re Caribbean Petroleum Corp., No. 13-2326, 2014 WL 1778050 (3d Cir. May 6, 2014)

On May 6, 2014, the Third Circuit affirmed the decision of the Bankruptcy Court in In re Caribbean Petroleum Corp. to grant a liquidating trustee’s motion to disallow a proof of claim pursuant to 11 U.S.C. § 502(e)(1)(B).  In doing so, the Court disregarded a challenge to the applicability of section 502(e)(1)(B) in the post-confirmation context.

Interek USA, Inc. (“Interek”) sought contribution from the Caribbean Petroleum debtors in the event that Interek was found liable in ongoing litigation related to a large explosion at the debtors’… Read More

Third Circuit Extends and Applies Broad Definition of “Claim” Beyond Common Law Tort Actions

In re Ruitenberg, 745 F.3d 647 (3d Cir. 2014)

The Honorable Thomas L. Ambro penned this short Opinion, extending the holding of JELD-WEN, Inc. v. Van Brunt (In re Grossman’s), 607 F.3d 114 (3d Cir. 2010), outside the context of tort-related claims.  In Grossman’s, the Third Circuit revisited the question of how to determine the existence of a claim.  It abandoned the earlier and narrower “accrual test” set out in In re Frenville, 744 F.2d 332 (3d Cir. 1984), which focused on when a right to payment arose as determined by governing state law, for a broader test… Read More

Third Circuit Upholds Bankruptcy Court’s Approval of 9019 Settlement – Acknowledges Court’s Bank of Knowledge Gathered Throughout a Bankruptcy Case

Mangano v. ID Liquidation One, LLC (f/k/a Indianapolis Downs, LLC), No. 13-3386, 2014 WL 6155944 (3d Cir. Feb. 19, 2014)

In this non-precedential Opinion, the Third Circuit was faced with an appeal of an order entered by the District Court, affirming a Bankruptcy Court order, pursuant to Bankruptcy Rule 9019, approving a settlement between a set of long-standing litigants – the debtors, Indianapolis Down, LLC (n/k/a ID Liquidation One, LLC) and Indiana Downs Capital Corp. (n/k/a ID Liquidation Two, Inc.) (collectively, the “Debtors”), on one hand, and Power Plan Entertainment Casino Resorts… Read More

Personal Injury Claims Arising from Wrongful Acts of a Debtor, Asserted Against a Third Party Purchaser Under a State Law Successor Liability Theory, Held by Third Circuit to be Property of the Estate

Aaroma Holdings, LLC v. Diacetyl Plaintiffs (In re Emoral, Inc.), No. 13-1467, 2014 WL 259870 (3d Cir. Jan. 24, 2014)

On January 24, 2014, in a precedential Opinion, the Third Circuit determined that personal injury causes of action, arising from wrongful conduct of a debtor, asserted against a non-debtor third party pursuant to a “mere continuation” theory of successor liability under state law, are “generalized claims” belonging to a bankruptcy estate rather than personal claims belonging to individual creditors.

Prior to the bankruptcy filing of Emoral, Inc. (“Emoral”), Aaroma Holdings LLC… Read More