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

Just days ago, the MAS Litigation Trust, spawned from the bankruptcy of Meridian Automotive Systems, Inc., filed nearly 300 actions to recover avoidable transfers.  The causes of action seek avoidance of preferential transfers under Section 547 of the Bankruptcy Code as well as avoidance of fraudulent transfers under Section 548.  In addition, the complaints seek denial of claims under Section 502(d) and recovery of all avoided transfers under Section 550.

In what is sure to feel like double jeopardy, many of the defendants now being sued by Meridian also suffered Meridian's purchase of Cambridge Industries Holdings, Inc. out of its own bankruptcy, Case No. 00-1919 (Bankr. D. Delaware), only to be sued by the Cambridge liquidating trustee for preferences and fraudulent conveyances.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Judge Burton R. Lifland of the Bankruptcy Court for the Southern District of New York issued a decision on Thursday (here) that will undoubtedly be the discussion topic at many future bankruptcy conferences.  In his April 19, 2007 decision in the Dana Corporation bankruptcy, Judge Lifland held (i) there is no federal right of reclamation created by 11 U.S.C § 546(c), and (2) unless an individual reclamation claimant holds a claim in excess of a superior claimant's claim, the reclamation claim is valueless. Continue Reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

W.R. Grace & Co. v. Chakarian (In re W.R. Grace & Co.), 366 B.R. 295 (Bankr. D. Del. 2007) (Judge Judith K. Fitzgerald)

In an opinion interpreting the Third Circuit’s Pacor standard for related-to jurisdiction, the Court held that state court actions against the State of Montana in which the W.R. Grace & Co. debtors were named as co-defendants – but which causes of action were enjoined – could proceed to the extent that they sought to establish the liability of the State of Montana. Because Montana would have to bring subsequent claims against the Debtors for indemnity and contribution, the state court actions had no “conceivable” effect on the bankruptcy estate, as contemplated by Pacor, so as to vest the Court with related-to jurisdiction over the claims. The Court therefore denied the Debtors’ motion to expand a preliminary injunction against the suits to the state of Montana.

Continue Reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In re W.R. Grace & Co., Case No. 01-01139, 2007 WL 1129170 (Bankr. D. Del. April 13, 2007) (Judge Judith K. Fitzgerald)

The State of Montana filed a motion for relief from the automatic stay to join debtor W.R. Grace & Co. as a third-party defendant in asbestos-related litigation pending in Montana state courts. The claims asserted in those actions arose out of Grace’s former vermiculite mining and processing operation in Montana.

The United States Bankruptcy Court for the District of Delaware analyzed Montana’s request under the standard articulated by the court in In re Rexene Products Co. and In re Continental Airlines, Inc. That standard requires consideration of the prejudice and hardships to the parties, as well as the likelihood that the creditor would ultimately prevail on the merits. The court denied the motion, finding that the debtor, the bankruptcy estate and the other creditors would suffer great prejudice if Montana were permitted to proceed against the debtor in state court, and that Montana’s claims for indemnity and contribution were premature, but preserved in Montana’s proof of claim.

Continue Reading...

• Email This
• Print
• Comments
• Trackbacks (1)
• Share Link

At the hearing of First Day motions on April 17, 2007, Judge Peter J. Walsh authorized Custom Food Products, Inc. to borrow up to $25 million in interim post-petition DIP financing from Wachovia Capital Finance Corporation (inclusive of a letter of credit subfacility of $5 million and an over-advance subfacility of $3 million).  A final hearing to approve the post-petition financing has been set for May 16, 2007 at 10:30 a.m.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Custom Food Products, Inc., located in Carson, California, filed a voluntary Chapter 11 petition on April 13, 2007 in the Bankruptcy Court for the District of Delaware.  The petition has been assigned case number 07-10495.  Judge Peter J. Walsh is presiding over this case.  The petition lists between $1 million and $100 million in assets, and a similar amount of liabilities.  The petition was filed by Klee, Tuchin, Bogdanoff & Stern LLP located in Los Angeles, California, and by the Wilmington, Delaware office of Pachulski Stang Ziehl Young Jones & Weintraub LLP.

Continue Reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Pickett v. Integrated Health Servs., Inc. (In re Integrated Health Servs., Inc.), 233 Fed. Appx. 115 (3d Cir. 2007) (Circuit Judge Maryanne Trump Barry)

Prior to the petition date of debtor Integrated Health Services, Inc., the debtor issued a memo assigning some interest in a corporate golf club membership to its Executive Vice President and Chief Financial Officer, C. Taylor Pickett. This membership was later scheduled by the debtor as an asset of the debtor on schedules signed by Pickett. After Pickett left employment of the debtor almost two years after the petition date, the debtor removed Pickett as the corporate designee on the membership. Pickett then sought a declaratory judgment from the bankruptcy court that the membership was assigned to him, and that the debtor had no interest in it. The bankruptcy court granted summary judgment in favor of the debtor, finding the assignment memo to be ambiguous, and that the parties’ behavior evidenced that they believed that the debtor retained ownership of the membership. The district court affirmed, and the Third Circuit affirmed the district court order.

Continue Reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Today, Morris James LLP announced the publication of its bankruptcy law blog, the Delaware Business Bankruptcy Report, www.debusinessbankruptcy.com, the first blog devoted entirely to the Delaware commercial bankruptcy practice.
Continue Reading...

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Joan Fabrics Corporation and Madison Avenue Designs LLC filed voluntary Chapter 11 petitions on April 10, 2007 in the Bankruptcy Court for the District of Delaware.  They have been assigned case numbers 07-10479 and 07-10480, respectively.  Each petition lists between $1 million and $100 million each in assets and liabilities.  The petitions were filed by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. in Boston, Massachusetts, and by the Wilmington office of Pachulski, Stang, Ziehl Young, Jones & Weintraub LLP.  Judge Christopher S. Sontchi is presiding over these cases.

 

UPDATE: These cases converted to Chapter 7, effective November 20, 2007 at 5:00 p.m. EST.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On Monday, April 2, 2007, New Century Mortgage Corporation and certain affiliated companies filed for bankruptcy protection in the United States Bankruptcy Court for the District of Delaware pursuant to chapter 11 of the Bankruptcy Code.  New Century listed assets and liabilities each in excess of $100 million.  New Century's counsel is O'Melveny & Myers, LLP in San Francisco, California.  New Century's Delaware counsel is Richards, Layton & Finger, P.A.

• Email This
• Print
• Comments
• Trackbacks (1)
• Share Link