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

On March 30, 2010, Eigen, Inc. a developer of imaging tools and products for healthcare professionals, filed for chapter 11 protection in Delaware. The petition lists assets and liabilities of between $10-50 million each.

According to the declaration filed in support of the case by Richard Edick, Chief Restructuring Officer of the debtor, Eigen products have, for more than 30 years, allowed physicians to obtain high-definition views of moving image studies. Mr. Edick counts the debtor’s intellectual property for such products as perhaps its most valuable asset.

Mr. Edick indicates that the debtor’s lender had attempted to commence an asset sale prior to the filing under Article 9 of the UCC. Certain of the debtor’s former employees were able to obtain a temporary restraining order blocking the sale. Under the circumstances, the lender was unwilling to fund the debtor any further and the debtor was unable to obtain any equity investment which prompted the filing.

The case has been assigned to The Honorable Peter J. Walsh, and has been docketed as Case No. 10-11061.

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Mervyn’s LLC v. Lubert-Adler Group IV, LLC (In re Mervyn’s Holdings, LLC), Adv. Pro. No. 08-51402 (KG) (March 12, 2010) (K. Gross).

The Official Committee of Unsecured Creditors (the “Committee”) asserted a subsequent transferee claim pursuant to 11 U.S.C. § 550(a)(2) against Bank of America (in its capacity as successor trustee of a trust) to recover certain liens granted to the former trustee on transferred real estate. Due to numerous omissions in the original Complaint, which Bank of America addressed in a timely filed motion to dismiss, the Committee sought to amend its Complaint. Bank of America opposed the amendments, arguing that they would prove futile because Bank of America was not a “transferee” for purposes of 11 U.S.C. § 550.

The Court agreed with Bank of America, denying the Committee’s Motion to Amend as futile and granting Bank of America’s Motion to Dismiss.

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Early this morning, March 30, 2010, Xerium Technologies, Inc. and 15 affiliated debtors filed Chapter 11 in Delaware. The petition lists total assets exceeding $1 billion, and liabilities between $500 million and $1 billion. The main case number is 10-11031 and Judge Kevin J. Carey has been assigned to the case.

According to the declaration in support of the filing made by Stephen Light, CEO and Chairman of the Board of Xerium Technologies, the debtors are “a leading global manufacturer and supplier of two categories of consumable products used in the production of paper products and roll technology products installed in paper-making machines.”  Mr. Light’s declaration points to “decreased demand for [paper producers’] products . . . due to the increasing prevalence of electronic media” as part of the reason for the filing. “The drop in global demand for paper products has resulted in a surplus of paper inventory at paper-making companies and corresponding curtailments and idling of paper-making machines. In addition, as Xerium’s customers have experienced difficulty raising funds in the capital markets, customers’ demands for Xerium’s products and services has [sic] necessarily contracted.”

On March 2, 2010, the debtors commenced a pre-petition solicitation of votes in favor of a pre-packaged plan and disclosure statement. Mr. Light’s declaration indicates that the plan has been overwhelmingly supported by the two classes entitled to vote. Accordingly, the debtors will be seeking to exit bankruptcy in mid-May, 2010.

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