Delaware Business Bankruptcy Report : Delaware Business Bankruptcy Report : Morris James LLP Lawyers & Attorneys

Commercial Chapter 11 case filings in the United States Bankruptcy Court for the District of Delaware in 2009:

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In re Goody’s Family Clothing, Inc., Case No. 08-11133 (CSS), Opinion (Bankr. D. Del., Feb. 6, 2009).

The Debtors filed an objection to Section 503(b)(9) (“503(b)(9)”) administrative claims they alleged were misclassified on the basis that the claimant, Added Value Services, Inc. (“AVS”) provided services and not goods, as is required under 503(b)(9) of the Bankruptcy Code. The Court, holding that goods must be “movable,” agreed with the Debtors and found that AVS’s claim was misclassified as a 503(b)(9) claim.

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Moss Landing Commercial Park, LLC v. Kaiser Aluminum Corp. (In re Kaiser Aluminum Corp.), Case No. 02-10429, 2009 WL 150863 (D. Del. Jan. 21, 2009) (Judge Joseph J. Farnan, Jr.)

Moss Landing Commercial Park, LLC (“Moss Landing”) appealed a Bankruptcy Court Order that required Moss Landing to dismiss without prejudice the action it filed against the reorganized Debtors in California. In the California action, Moss Landing sought, among other things, injunctive relief requiring the Debtors to remediate environmental contamination they caused to land purchased by Moss Landing prior to the confirmation of Debtors’ Plan. In its appeal, Moss Landing contended that (1) the bankruptcy discharge did not apply to actions against a reorganized debtor for injunctive relief and (2) the Debtors failed to provide it, a known creditor, with actual notice of the confirmation hearing on the Plan, and therefore, Moss Landing could not be bound by the Plan. The Debtors countered that (1) the Plan injunction bars all entities from commencing or continuing any action on account of any claim or liability arising on or before the Plan effective date, (2) Moss Landing, as a successor in interest to a party who settled the remediation claim with the Debtors, was not entitled to notice, and (3) Moss Landing alternatively moved for money damages and because the injunctive claims could be converted to money damages, the Plan injunction bars the action. 

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In re Semcrude, L.P., 2009 WL 68873 (Bankr. D. Del. Jan. 9, 2009) (Judge Brendan Linehan Shannon)

Chevron entered into pre-petition contracts with SemCrude, L.P., SemFuel, L.P., and SemStream, L.P. for the sale or purchase of crude oil, regular unleaded gasoline, and/or butane, isobutene and propane. The sale/purchase agreements all contained netting provisions that provided that if either party failed to meet its payment or delivery obligations, then the other party could offset any deliveries or overdue payments against the defaulting party or any of its affiliates. It was undisputed that the three debtors were affiliates of each other. As of the petition date, Chevron owed a balance of approximately $1.4 million to SemCrude, L.P. However, Chevron was owed approximately $10.2 million by SemFuel, L.P. and $3.3 million by SemStream, L.P. Chevron Products Company (“Chevron”) moved for relief from the automatic stay to effect a triangular setoff of these debts owed between it and three separate debtors. 

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Claybrook v. Metro Auto Xpress, LLC (In re American Remanufacturers, Inc.), Case No. 05-20022, 2008 WL 2909871 (Bankr. D. Del. July 25, 2008) (Walsh, J.)

In this Chapter 7 case, the American Remanufacturers, Inc.’s (the “Debtors”) business involved remanufacturing automobile parts for resale. Prior to and after the bankruptcy, the Tri-City purchased automotive parts produced by the Debtors and received credits for used parts it sold to the Debtors. The Chapter 7 Trustee commenced an adversary proceeding against Metro Auto Xpress trading as Tri-City Automotive Warehouse (“Tri-City”) alleging breach of contract, unjust enrichment, quantum meruit, and avoidance and turnover of estate property.  The Bankruptcy Court granted Tri-City’s motion to dismiss the avoidance and recovery claims.

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Commercial Chapter 11 case filings in the United States Bankruptcy Court for the District of Delaware in 2008:

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Due Process and 363 Sales of Consignment Goods, American Bankruptcy Institute Young & New Members Committee Newsletter, Vol. 6, No. 4, November 2008.  Authored by Ericka F. Johnson.
 

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In re Goody’s Family Clothing, Inc., 392 B.R. 604 (Bankr. D. Del. 2008) (Judge Christopher S. Sontchi)

The Bankruptcy Court held that the court may allow an administrative claim for unpaid post-petition rent under section 503(b)(1), provided that the claim is for an actual, necessary cost and expense of preserving the estate. The amount of the claim is the fair market value of the premises, which is presumed to be the rent due under the lease, unless contrary evidence is presented. However, timing of administrative expense payments remain at the discretion of the court.

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Yesterday, GWLS Holdings, Inc. and its related debtors filed petitions under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The debtors have requested that these cases be jointly administered under case number 08-12430. The Honorable Peter J. Walsh is presiding over these cases.

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