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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 Jurisdiction & Venue

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 Mar. 17, 2017) corrected and superseded by 2017 WL 1064997 (D. Del.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

Bankruptcy Court Finds “Close Nexus” Between Adversary Proceeding and Plan Necessary to Exercise Post-Confirmation, “Related to” Jurisdiction

Emerald Capital Advisors Corp. v. Karma Auto. LLC (In re FAH Liquidating Corp.), Adv. No. 16-51528 (KG), 2017 WL 663521 (Bankr. D. Del. Feb. 16, 2017)

In denying the motion to dismiss filed by Wanxiang Clean Energy USA LLC (“Wanxiang”) and Karma Automotive LLC (“Karma” and together with Wanxiang, “Defendants”), the Bankruptcy Court found that it has both “arising in” and “related to” jurisdiction to hear an adversary proceeding filed by the Trustee for the FAH Liquidating Trust (“Trustee”) over two years after confirmation.

A more fulsome history of the bankruptcy cases filed by Fisker Automotive Holdings, Inc. and Fisker… 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

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

District Court Denies Motion To Withdraw the Reference In Nortel, May Consider Renewed Motion At A Later Time

SNMP Research Int’l, Inc. v. Nortel Networks, Inc. (In re Nortel Networks, Inc.), No. 15-449 (LPS), 2015 WL 5275966 (D. Del. Sept. 9, 2015)

Chief Judge Stark of the District Court of Delaware recently denied a motion to withdraw the reference of an adversary proceeding in the cross-border bankruptcy case of In re Nortel Networks, Inc.  The Court held that due to the infancy of the proceeding and the Bankruptcy Court’s familiarity with the issues, the Bankruptcy Court would be better suited to preside over the proceeding until, if ever, a jury trial becomes necessary.

SNMP Research Int’l Inc. (“SNMP”), a creditor… Read More

Delaware District Court Transfers Declaratory Relief Action Based on the Anticipatory Filing Exception to the First Filing Rule

Flintkote Co. v. Aviva P.L.C., No. 13-103-LPS, 2015 WL 1405922 (D. Del. Mar. 25, 2015)

This Memorandum Opinion stems from a Third Circuit reversal of a Delaware District Court ruling that granted a motion to compel arbitration and dismissed as moot a motion to dismiss or, in the alternative, to transfer filed by Defendant Aviva P.L.C. (“Aviva”).  Because the Third Circuit vacated the Order denying the motion to transfer as moot, Aviva renewed its motion.  Such renewed motion is the subject of this Memorandum Opinion.  In granting the relief requested, Chief Judge Stark ruled that the anticipatory filing exception… Read More

A Simple Example: Withdrawal Of The Reference Denied By Delaware District Court Despite Federal RICO Claim

Barry v. Santander Bank, N.A. (In re Liberty State Benefits of Delaware Inc.), Civ. No. 14-677-LPS (D. Del. Mar. 12, 2015)

On March 12, 2015, Chief Judge Stark of Delaware’s District Court denied the request of defendant Santander Bank, N.A. (the “Defendant”) to withdraw the reference, rejecting Defendant’s arguments for mandatory and permissive withdrawal.  Richard Barry, the chapter 11 trustee of the debtor (the “Plaintiff”), alleged in the complaint almost entirely non-bankruptcy causes of action, including violations of the federal Racketeering Influenced and Corrupt Organization Act (“RICO”)—the sole basis for the Defendant’s mandatory withdrawal request.  Ultimately, the Court found,… 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

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

Plaintiff Successfully Obtains Venue Transfer Given Change in Circumstances; District Court Sua Sponte Transfers Venue of Related Cases

Zazzali v. Wavetronix LLC (In re DBSI, Inc.), No. 12-cv-1211 (GMS), et al. (D. Del. Sept. 25, 2014)

This Memorandum Opinion issued by Judge Sleet of the Delaware District Court relates to multiple bankruptcy and securities proceedings pending in Delaware stemming from the alleged Ponzi scheme perpetrated by directors of the DBSI entities.  The bankruptcy actions (collectively, the “Bankruptcy Cases”) at issue are: (i) a declaratory action commenced by several parties, including Wavetronix LLC, (collectively, the “Moving Parties”) related to investments, promissory notes and membership interests in or made by a DBSI debtor; and (ii) an adversary proceeding commenced by… Read More