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

In re Murray, 377 B.R. 464 (Bankr. D. Del. 2007) (Judge Brendan L. Shannon)

Although our purpose here at the Delaware Business Bankruptcy Report is to provide news and commentary on commercial bankruptcy cases here in Delaware, the Court published an opinion this week in a consumer case that we want to share with our readers. First, a little background information is helpful. In Delaware, license plates are freely transferable.  There is a vigorous trade in low-digit license plates. The most coveted plates of all are those with a single digit. Similarly, two-digit and three-digit plates are hot commodities that can sell for eye popping prices.

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Stanziale v. Pepper Hamilton LLP (In re Student Finance Corp.), No. 04-1551 (JJF), 2007 WL 2936195 (D. Del. Oct. 5, 2007) (Judge Joseph J. Farnan, Jr.)

In this adversary proceeding in the United States District Court for the District of Delaware, certain defendants moved to strike damages claims alleged by the trustee of the estate of Student Finance Corporation.  The Court granted the motion, finding that the trustee failed to provide fair notice of these damages claims, as required under Fed. R. Civ. P. 8(a) (made applicable to this adversary proceeding by Fed. R. Bankr. P. 7008(a)). 

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In re Shenango Group Inc., 501 F.3d 338 (3d Cir. Sept. 6, 2007) (Circuit Judge D. Brooks Smith)

In this precedential opinion, the United States Court of Appeals for the Third Circuit, in a case of first impression, adopted a standard for reviewing a bankruptcy court’s interpretation of its own order. If the appeal concerns a bankruptcy court’s interpretation its own order, the Court held that an abuse of discretion standard should be applied. If the issue under review presents only a question of law, that review will be de novo.

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In re FLYi, Inc., 377 B.R. 140 (Bankr. D. Del. 2007) (Judge Mary F. Walrath)

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In re Argose, Inc., 377 B.R. 148 (Bankr. D. Del. 2007) (Judge Mary F. Walrath)

The Trustee of the debtor’s Chapter 7 estate entered into a stipulation with the debtor’s secured lenders for the payment of fees to Trustee’s counsel. The stipulation permitted a carve-out for Trustee’s counsel of $50,000, which could be renegotiated depending on the “complexity” of the sale of the debtor’s assets. The stipulation also carved out $50,000 for unsecured creditors. The Court entered an order approving the stipulation. After asset sales that returned far less for the estate than anticipated, Trustee’s counsel submitted final fee applications for $81,393.50. After the Court approved the application, the Trustee paid the fee to his counsel. The Trustee then moved to modify the order approving the stipulation to allow the higher fees, and represented to the Court that, as a consequence, after payment of the Trustee’s commissions, there would be insufficient funds to pay to the unsecured creditors their full $50,000 carve out. The Court denied the motion, and the Trustee moved for reconsideration. On reconsideration, the Court reversed itself, finding that the stipulation permitted this course of action.

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