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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 Absolute Priority Rule

The Supreme Court’s Answer is Simply “No”—Structured Dismissals Cannot Deviate From the Code’s Priority Rules Without Consent of Affected Creditors

Czyzewski v. Jevic Holding Corp., 580 U.S. ___ (2017)

In Official Comm. of Unsecured Creditors v. CIT Group/Business Credit, Inc. (In re Jevic Holding Corp.), 787 F.3d 173 (3d Cir. May 21, 2015), the Third Circuit Court of Appeals examined structured dismissals and whether the distributions provided for therein can deviate from the Bankruptcy Code’s priority distribution scheme.  It held that they could but only in the “rare case.”  Almost two years later, the Supreme Court has weighed in on the issue, disagreeing with the Third Circuit and holding that a bankruptcy court cannot approve a structured dismissal that… Read More

Insider’s Scoop: Judge Sontchi’s Decision to Confirm Horsehead’s Plan Was One of His Honor’s Most Difficult and Closest Calls in Ten Years on the Bench

In re Horsehead Holding Corp., No. 16-10287 (CSS) (Bankr. D. Del. Sept. 2, 2016)

Following a three day confirmation trial, which attracted scores of shareholders and running commentary via live tweets from the courtroom, Judge Sontchi confirmed the second amended plan of reorganization (the “Plan”) proposed by Horsehead Holding Corp. and its affiliated debtors (“Horsehead”) over the objection of the official committee of equity holders (the “Equity Committee”), holding that the Plan was proposed in good faith and satisfied the absolute priority rule.  His Honor described the decision as one of the most difficult and closest calls… Read More

Third Circuit Allows 363 Purchaser’s Funds to Bypass IRS and Satisfy Certain Administrative and General Unsecured Claims

In re ICL Holding Company, Inc., No. 14-2709, 2015 WL 5315604 (3d Cir. Sept. 14, 2015), aff’g sub nom United States v. LCI Holding Co., Inc., Nos. 13-924 (SLR), 13-1188 (SLR), 2014 WL 975145 (D. Del. March 10, 2014)

As discussed by the Delaware Bankruptcy Insider in March of last year, in ruling on a motion for stay the Delaware District Court determined that the Delaware Bankruptcy Court did not err when it approved a sale of substantially all of the assets of LCI Holding Company, Inc. and its affiliated debtors (the “Debtors”) and a settlement between the purchaser (the Debtors’… Read More

Third Circuit Approves of Structured Dismissals That Deviate From the Bankruptcy Code’s Priority Scheme – But Only in Rare Cases

Official Comm. of Unsecured Creditors v. CIT Group/Business Credit, Inc. (In re Jevic Holding Corp.), No. 14-1465, 2015 WL 2403443 (3d Cir. May 21, 2015)

The Third Circuit Court of Appeals (the “Third Circuit”) answered a novel question of bankruptcy law in the affirmative—whether a chapter 11 case can ever be resolved in a “structured dismissal” (a disposition that winds up the bankruptcy with certain conditions attached instead of simply dismissing the case and restoring the status quo ante) that deviates from the priority scheme of the Bankruptcy Code.  In rare cases, the Bankruptcy… Read More

Debtors’ Funds Purchased in Section 363 Sale Permitted to be Disbursed to Debtors’ Administrative and Unsecured Creditors Over IRS Objections

United States v. LCI Holding Co., Inc., Nos. 13-924 (SLR), 13-1188 (SLR), 2014 WL 975145 (D. Del. March 10, 2014)

On March 10, 2014, Judge Sue L. Robinson of the District Court denied the request of the United States, on behalf of the Internal Revenue Service (the “IRS”), to stay disbursement of funds placed into escrow by a purchaser of debtor-assets intended to satisfy some but not all administrative and unsecured claims asserted against the debtors.  During the chapter 11 bankruptcy cases of LCI Holding Company, Inc. and its affiliated debtors (the “Debtors”), the Debtors’ prepetition… Read More

District Court Affirms Bankruptcy Court’s Approval of a Settlement and Structured Dismissal in the Face of an Absolute Priority Challenge

Czyzewski v. Jevic Holding Corp. (In re Jevic Holding Corp.), No. 13-104 (SLR), 2014 WL 268613 (D. Del. Jan. 24, 2014)

On January 24, 2014, Judge Sue L. Robinson affirmed a Bankruptcy Court order approving a settlement and structured dismissal of the chapter 11 cases of Jevic Holding Corp. and its affiliated debtors (the “Debtors“) in the face of a challenge by certain appellants asserting WARN claims that such settlement, among other things, violated the absolute priority rule of section 1129 of the Bankruptcy Code.  The settlement, reached among the Debtors, the… Read More