Decisions From Delaware Factor Into NY Bankruptcy Court's Denial Of Reclamation Claims

Posted on April 23, 2007 by Morris James Delaware
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...
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Bankruptcy Court Approves Management Incentive Plan and Sales Bonus Plan as Proper Exercise of Debtor's Business Judgment and Holds That Plans Were Not KERPs That Were Subject to 11 U.S.C. § 503(c)

Posted on March 13, 2007 by Morris James Delaware

In re Global Home Prods., LLC, Case No. 06-10340 (KG), 369 B.R. 778 (Bankr. D. Del. 2007) (Judge Kevin Gross)

The debtors proposed bonus plans for management and certain sales staff, which were based on performance and incentives. The debtors’ unionized employees objected to the plan, characterizing it as a Key Employee Retention Plan (KERP), approval of which was subject to the rigorous requirements of 11 U.S.C. § 503(c). The court approved the plans, finding that section 503(c) was inapplicable, as the plans were primarily incentivizing, rather than retentive or in the nature of severance. Accordingly, the court measured whether the plans were formulated according to a proper exercise of the debtors’ business judgment, and finding that they were, approved them under the less exacting business judgment standard of 11 U.S.C. § 363.

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