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

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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Today, January 20, 2010, Specialty Packaging Holdings, Inc. and five direct and indirect debtor subsidiaries commenced Chapter 11 bankruptcy proceedings in Delaware. 

According to the declaration of Michael J. Musso, CRO and Interim CEO of the Debtors, the Debtors are collectively an industry leading global developer and manufacturer of color cosmetics. They entered chapter 11 proceedings as a result of “extreme liquidity pressure” occasioned, in part, by “efforts to expand into new market segments, pricing and margin difficulties, lack of expense management, inadequate working capital planning, and initiatives that were not balanced with cash flow requirements.”

Among other matters, the certain of the debtors are seeking expedited consideration of bid procedures in connection with a contemplated sale of certain of the Debtors’ assets.

This case has been assigned to The Honorable Kevin Gross, and has been docketed at Case No. 10-10142.

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Commercial Chapter 11 case filings in the United States Bankruptcy Court for the District of Delaware in 2009:

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Commercial Chapter 11 case filings in the United States Bankruptcy Court for the District of Delaware in 2008:

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MAS Litigation Trust v. Plastech Engineered Prods. (In re Meridian Automotive Sys.-Composite Ops. Inc.), Adv. Pro. No. 07-51196 (KG), 2007 WL 4322527 (Bankr. D. Del. Dec. 5, 2007) (Judge Kevin Gross)

Plastech Engineered Products, Inc., a defendant in an avoidance action commenced by the MAS Litigation Trust, moved to dismiss the plaintiff’s amended complaint on the grounds that, inter alia, the new claims set forth in the amended complaint did not relate back to the original complaint.  In a matter related to one we discussed here last week, The United States Bankruptcy Court for the District of Delaware granted the motion, finding that the new claims did not seem to arise out of the same transactions described in the original complaint.  However, the Court granted the plaintiff twenty days to amend the complaint, if it could allege facts sufficient to show the additional claims related back to the original ones.

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MAS Litigation  Trust v. Plastech LDM (In re Meridian Automotive Sys.-Composite Ops., Inc., Case No. 05-11168 (MFW), Adv. Pro. No. 07-51195 (KG), 2007 WL 4292130 (Bankr. D. Del. Dec. 5, 2007) (Judge Kevin Gross)

The trustee of the litigation trust for the estate of debtor Meridian Automotive Systems, Inc. attempted to serve an adversary complaint by naming and serving an entity that does not exist, and addressed such service to an incorrect address and without addressing service to an officer or agent of the defendant.  On the putative defendant’s motion, the United States Bankruptcy Court for the District of Delaware dismissed the complaint, finding that service did not comport with the requirements of Fed. R. Bankr. P. 7004(b)(3).

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On November 1, 2007, California mattress retailer Gallery Corporation filed a petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.  The debtor is a wholly-owned subsidiary of non-debtor Pacific Coast Mattress, Inc.

According to the affidavit that the debtor filed in support of its first-day motions, the debtor owns and operates 52 Mattress Gallery retail stores in Southern California.  The debtor attributes the filing, in part, to fallout from record high gas prices, home foreclosures and the subprime lending crisis, which led to a downturn in the Southern California housing market.  As a result, according to the debtor, fewer people have been buying and furnishing homes, severely affecting the debtor’s business. 

The debtor will propose a sale of all its stock to Ortho Mattress, Inc.  According to the debtor's affidavit, Ortho Mattress has made an irrevocable commitment to purchase the stock.  The Honorable Kevin Gross is presiding over this case, which has been assigned case number 07-11628.

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Commercial Chapter 11 case filings in the United States Bankruptcy Court for the District of Delaware in 2007:

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The SCO Group, Inc. and SCO Operations, Inc. each filed voluntary petition for bankruptcy under Chapter 11 of the United States Bankruptcy Code. The SCO debtors filed their cases in Delaware, where Judge Kevin Gross will preside. 

 

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Northwest Suburban Community Hospital, Inc., a wholly-owned subsidiary of non-debtor Chatham Capital Corp., filed a petition for relief under Chapter 11 of the Bankruptcy Code by commencing a case in the United States Bankruptcy Court for the District of Delaware on July 30, 2007. This case, has been assigned to the Honorable Kevin Gross under case number 07-11018.

According to the debtor’s first day declaration, beginning in 1997, the debtor operated a treatment facility for morbidly obese patients at its facility in Belvidere, Illinois. However, because of declining business and revenue attributed by the debtor to increased competition and insufficient levels of reimbursement from Blue Cross Blue Shield of Illinois, the debtor ceased its treatment of obesity in January 2007. Since that time, the debtor has continued to operate an emergency standby department at its facility.

According to the declaration, the debtor’s liabilities exceed its assets by in excess of $3.7 million. The debtor is using the bankruptcy process to effect a sale of its facility. SwedishAmerican Hospital is the proposed stalking horse, with a bid of $5,750,000.

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On July 2, 2007, Exaeris, Inc. and Inyx USA Ltd. each filed petitions for bankruptcy under Chapter 11 of the Bankruptcy Code. The debtors filed a motion for joint administration of these cases under case number 07-10887. Judge Kevin Gross of the United States Bankruptcy Court for the District of Delaware has been assigned to these cases. Continue Reading...

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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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In re Global Home Prods., LLC, Case No. 06-10340 (KG), 2006 WL 3791955 (Bankr. D. Del. Dec. 21, 2006) (Judge Kevin Gross)

The movant, a creditor of the debtors, with an administrative expense claim for goods delivered to the debtor within the 20 days preceding the date of the debtors’ bankruptcy petitions, moved for allowance and immediate payment of its claim pursuant to11 U.S.C. § 503(b)(9). The court denied the request for immediate payment, finding that the harm to the debtor of being required to make a payment that was not in its budget, and of a type that many other parties had sought, and might in the future seek, outweighed the hardship, if any, to the creditor.

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Shubert v. Premier Paper Prods, LLC (In re American Tissue Inc.), Case No. 01-10370 (KG), Adv. No. 06-50929 (KG) (Bankr. D. Del. Dec. 4, 2006) (Judge Kevin Gross)

This dispute concerned numerous items of machinery and equipment which the Chapter 7 Trustee alleged belonged to the debtors but were in possession of the defendants. In this ruling, the Bankruptcy Court extended an ex parte temporary restraining order into a preliminary injunction, but with added limitations based on the evidence. The court allowed the planned auction to go forward, but escrowed the sale proceeds from the items to which it was shown the debtors might have title.

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