Delaware Chapter 11 Filings - 2009
Commercial Chapter 11 case filings in the United States Bankruptcy Court for the District of Delaware in 2009:
Continue Reading..."Goods" For 503(b)(9) Purposes Must Be Movable
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.
Continue Reading...Delaware Chapter 11 Filings - 2008
Commercial Chapter 11 case filings in the United States Bankruptcy Court for the District of Delaware in 2008:
Continue Reading...Post-petition Stub Rent Allowed as an Administrative Expense Claim Under 503(b)(1)
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.
Continue Reading...Synova Healthcare Group, Inc. Commences Bankruptcy Case in Delaware
Synova Healthcare Group, Inc. and its affiliated debtors filed petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The debtors filed these cases, over which Judge Christopher S. Sontchi is presiding, on December 18, 2007.
Subprime Lender Delta Financial Corporation Enters Bankruptcy
Delta Financial Corporation became the latest subprime lender casualty when it filed a Chapter 11 petition yesterday in the United States Bankruptcy Court for the District of Delaware. Related debtors Delta Funding Corporation, Renaissance REIT Investment Corp. and Renaissance Mortgage Investment Corporation also filed petitions in these cases that are being presided over by Judge Christopher S. Sontchi.
Continue Reading...Joan Fabrics Case Converts to Chapter 7
Effective at 5:00 p.m. Eastern time today, the Chapter 11 cases of Joan Fabrics Corp. and Madison Avenue Designs, LLC will convert to cases under Chapter 7 of the Bankruptcy Code. Yesterday, Judge Christopher S. Sontchi entered an order approving the debtors' motion to convert the cases.
In July, 2007, the Court approved a sale of substantially all of the debtors' assets. Since that time, the debtors engaged in the process of winding down their remaining operations. However, according to the debtors' motion convert the cases, the debtors' lenders did not consent to the debtors' further use of the lenders' cash collateral to administer the estates. The debtors therefore moved to convert the cases, and the Court approved the request.
In July, 2007, the Court approved a sale of substantially all of the debtors' assets. Since that time, the debtors engaged in the process of winding down their remaining operations. However, according to the debtors' motion convert the cases, the debtors' lenders did not consent to the debtors' further use of the lenders' cash collateral to administer the estates. The debtors therefore moved to convert the cases, and the Court approved the request.
Pope & Talbot Files Bankruptcy Case Three Weeks After Commencing Canadian Insolvency Proceedings
On November 19, 2007, Pope & Talbot, Inc., a Portland, Oregon-based concern, along with certain affiliates, filed cases under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Judge Christopher S. Sontchi has been assigned to the cases.
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Hoboken Wood Flooring Case Dismissed
On November 16, 2007, Judge Christopher S. Sontchi of the United States Bankruptcy Court for the District of Delaware entered an order dismissing the Chapter 7 bankruptcy cases of Hoboken Wood Flooring LLC and its affiliated debtors.
In a motion to dismiss the cases filed by the interim trustee of the debtor's estates, the trustee alleged that all the debtors' assets were encumbered by prior liens, and that there would be no funds with which to pay for the administration of the debtors' estates. Moreover, the trustee and the debtors' lender were unable to agree to a funding arrangement that would permit the trustee to be compensated. Pending before the Court at the time the cases were dismissed were motion of the prepetition lenders for relief from stay to foreclose on their collateral to prevent the trustee from using cash collateral.
The dismissal of these cases returns the debtors, lenders and other creditors to substantially the same position they were in before the debtors filed the cases on November 7, 2007.
In a motion to dismiss the cases filed by the interim trustee of the debtor's estates, the trustee alleged that all the debtors' assets were encumbered by prior liens, and that there would be no funds with which to pay for the administration of the debtors' estates. Moreover, the trustee and the debtors' lender were unable to agree to a funding arrangement that would permit the trustee to be compensated. Pending before the Court at the time the cases were dismissed were motion of the prepetition lenders for relief from stay to foreclose on their collateral to prevent the trustee from using cash collateral.
The dismissal of these cases returns the debtors, lenders and other creditors to substantially the same position they were in before the debtors filed the cases on November 7, 2007.
Hard Surface Distributor Hoboken Wood Flooring LLC Files Chapter 7 Petition in Delaware
On November 7, 2007, affiliated debtors Hoboken Wood Flooring LLC, HWF Holdings LLC, SPI Floors LLC, Garden State Supplies LLC, and WFA, LLC filed petitions for relief under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. According to press accounts, Hoboken Wood Flooring is the largest independent wood flooring distributor in the United States. Judge Christopher S. Sontchi has been assigned to preside over these cases. The debtors report over $100 million in liabilities, and estimate that no distributions will be made to unsecured creditors.
UPDATE: The United States Bankruptcy Court for the District of Delaware dismissed these bankruptcy cases on November 16, 2007. Details are available here.
Delaware Chapter 11 Filings - 2007
Commercial Chapter 11 case filings in the United States Bankruptcy Court for the District of Delaware in 2007:
Continue Reading...American Home Mortgage Files Bankruptcy in Delaware
This morning, in a filing that had been widely anticipated in the past two weeks, causing tremors in financial markets, American Home Mortgage Holdings, Inc. and certain of its affiliates filed petitions under Chapter 11 of the Bankruptcy Code in the United States District Court for the District of Delaware. Judge Christopher S. Sontchi has been assigned to these cases, which rank among the largest ever filed by a mortgage lender.
Unlike the string of subprime lender cases that have been filed this year, many of which filed in Delaware, this is a case of an Alt-A lender seeking bankruptcy protection. Alt-A loans, sometimes called “no doc loans,” are those made to borrowers with better credit scores, but with little or no income verification. In the wake of the recent subprime collapse, Alt-A lenders were predicted by many analysts to be highly vulnerable. According to press accounts, in recent weeks, other lenders with portfolios of Alt-A loans have moved to cut back on such transactions.
According to the debtors’ declaration in support of their petitions, these filings were brought on by rising default rates and falling real estate values that led to margin calls with respect to the debtors’ credit facilities. On Friday, August 3, 2007, the debtors terminated 6,500 employees in anticipation of these filings and the closing of the debtors’ businesses. As of December 31, 2006, the debtors report that they held a leveraged portfolio of mortgage loans and mortgage-backed securities of approximately $15.6 billion, while debtor American Home Mortgage Servicing, Inc. serviced approximately 197,000 loans with an aggregate principal amount of approximately $46.3 billion.
Bankruptcy Court Overrules Plan Administrator's Objection to Advancement and Indemnification Claim of Former Officer of RNI Debtors
In re RNI Wind Down Corp., 369 B.R. 174 (Bankr. D. Del. 2007) (Judge Christopher S. Sontchi)
Andrew D. Feldman, a former officer of RNI, a debtor with a Chapter 11 case pending in the United States Bankruptcy Court for the District of Delaware, filed a proof of claim for advancement and indemnification of legal fees and expenses incurred in connection with an SEC investigation of the RNI debtors and certain of their officers and directors. The Plan Administrator objected to the claim, arguing that it was a claim for reimbursement subject to disallowance under 11 U.S.C. § 502(e)(1)(B). While the Court agreed advancement and indemnification claims are claims for reimbursement, the Court held that Feldman’s claim was not a contingent claim, and was not a claim for which the debtors were co-liable, and therefore was not subject to disallowance under that section. The Court also declined the Plan Administrator’s alternative argument that the Court should estimate Feldman’s claim. In so doing, the Court rejected the argument that estimation was required to prevent undue delay of the administration of the bankruptcy estate.
Continue Reading...Oasys Mobile, Inc. Files for Bankruptcy; Proposes Prepackaged Plan of Reorganization
On July 18, 2007, Oasys Mobile, Inc. filed a petition for bankruptcy under Chapter 11 of the Bankruptcy Code. Judge Christopher S. Sontchi of the United States Bankruptcy Court for the District of Delaware has been assigned to the case. The case number is 07-10961.
Alliance Bancorp Files Chapter 7 Plan in Delaware, Becoming Latest Mortgage Lender to Enter Bankruptcy
On July 13, 2007, Alliance Bancorp, Inc., Alliance Mortgage Investments, Inc. and Alliance Bancorp filed petitions under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware, becoming the latest in a series of residential mortgage lenders to file bankruptcy petitions in Delaware. However, unlike previous cases that have filed here, Alliance is planning to liquidate, rather than reorganize. Judge Christopher S. Sontchi has been assigned to this case.
Court Declines to Approve Settlement of Plan Administrator's Objection to Indenture Trustee's Claim for Fees and Expenses, Finding Evidence of Reasonableness of Claim to Be Lacking
In re RNI Wind Down Corp., Case No. 06-10110 (CSS), 2007 WL 949647 (Bankr. D. Del. March 29, 2007) (Judge Christopher S. Sontchi)
The Plan Administrator in the bankruptcy case of RNI Wind Down Corporation and its affiliated debtors objected to a request for payment of fees and expenses pursuant to the debtors’ plan of reorganization by the indenture trustee of pre-petition notes of the debtors. The parties agreed to a settlement and moved for approval of the agreement. The Delaware Bankruptcy Court refused to approve the settlement, finding that the legal invoices and request for fees were so heavily redacted and inspecific as to make it impossible for the court to determine whether they were reasonable, and thus whether the settlement was equitable and fair. The court also determined that the plan did not modify the indenture agreement, which was a pre-petition contract among non-debtors, and that it lacked jurisdiction over claims arising under the indenture.
Continue Reading...Decisions From Delaware Factor Into NY Bankruptcy Court's Denial Of Reclamation Claims
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.
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Joan Fabrics Corporation and Madison Avenue Designs LLC File Chapter 11 Petitions
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.
Bankruptcy Court Declines to Grant Request for Certification of Appeal Directly to Third Circuit; Defers to District Court's Consideration of Motion for Leave to Appeal
Simon & Schuster, Inc. v. Advanced Marketing Servs. Inc. (In re Advanced Marketing Servs. Inc.), 366 B.R. 429 (Bankr. D. Del. 2007) (Judge Christopher S. Sontchi)
Simon & Schuster, a creditor of debtor Advanced Marketing Services, Inc., filed a reclamation claim against the debtor, and sought to have a temporary restraining order put in place to prevent the debtor from selling the S&S goods that were subject to the reclamation claim. The court denied the motion in a previously reported opinion. (here)
S&S then sought to pursue an appeal of the court’s interlocutory order denying the TRO motion, moved the District Court for leave to appeal, and requested that the Bankruptcy Court certify that the case was suitable for direct appeal to the United States Court of Appeals for the Third Circuit, pursuant to 11 U.S.C. § 158(d)(2). The Bankruptcy Court declined to decide the request, finding that, because the District Court and Bankruptcy Court were being asked to make an almost identical set of findings, judicial resources would best be used by deferring to the District Court to decide the motion for leave to appeal. Moreover, respect for the hierarchy of the courts warranted deference to the District Court.
Continue Reading...Court Denies TRO Application Of Reclamation Claimant Whose Goods Were Subject To Prior Liens Of Debtors' Lenders
In re Advanced Marketing Services, Inc., 360 B.R. 421 (Bankr. D. Del. 2007) (Judge Christopher S. Sontchi)
Simon & Schuster asserted a reclamation demand in excess of $5 million, and filed an adversary Complaint against the debtor to enforce its reclamation rights. In support of the complaint, Simon & Schuster sought a temporary restraining order to prevent the debtor from selling its goods. The court denied the application for the TRO, finding that the goods that were the object of the reclamation demand were subject to a prior, superior security interest of the debtors’ pre-petition and post-petition lenders. Accordingly, S&S was unable to show that it had a likelihood of success on the merits.
Continue Reading...Expert's "Invented" Enterprise Valuation Methodology Found Unreliable and Inadmissible
In re Nellson Nutraceutical, Inc., 356 B .R.364 (Bankr. D. Del. 2006) (Judge Christopher S. Sontchi)
At trial to determine the enterprise value of the Debtors, the Debtors’ expert tendered a valuation opinion based on a metric of EBITDA minus capital expenditures. Because this methodology is not generally accepted by experts in the field, and, moreover, was invented by the Debtors’ expert for use in this trial, the Court held that this method lacked reliability, and the Debtors’ expert’s testimony was therefore inadmissible under Federal Rule of Evidence 702.
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