Delaware Business Bankruptcy Report: Morris James LLP Lawyers and Attorneys

Home furnishings retail giant Linens 'n Thing has filed a Chapter 11 petition in the United States  Bankruptcy Court for the District of Delaware, where the Honorable Christopher S. Sontchi is presiding over the cases.  Linens 'n Things operated 589 retail stores in the United States and Canada.

According to the affidavit that the debtors' Chief Financial Officer filed in support of their first day motions, a number of external factors led to a steep decline in the debtors' profitability and liquidity that has prevented the debtors from continuing their plans to turn around the retailer.  The chief factors cited were the decline in the housing market and tightening of credit markets that have led to a decline of discretionary spending in the housewares and home furnishing sector.

The cases comprise thirteen (13) debtors with approximately 120,000 creditors.  The debtors have sought permission to pay pre-petition wages and benefits to their approximately 15,900 U.S. employees.

Rampant Internet-based rumors in recent months urged customers to use gift cards from Linens 'n Things amid speculation that the chain would declare bankruptcy.  However, the debtors sought permission from the Court to honor gift card and certain other customer obligations in the ordinary course.  The Court has approved this request.

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In re Truong, 513 F.3d 91 (3d Cir. 2008) (per curiam) (Precedential)

The debtors in this Chapter 7 case filed a motion in the Bankruptcy Court to hold a hearing on whether the Chapter 7 Trustee should be removed under 11 U.S.C. § 324 (a) because of a conflict of interest. The Bankruptcy Court denied the motion, and the District Court dismissed the debtors’ appeal. The Third Circuit held that the appeal was from an interlocutory appeal, and that it therefore lacked jurisdiction under 28 U.S.C. § 158(d).

In this Chapter 7 case, the debtors filed a motion to hold a hearing to determine whether there was cause to remove the Chapter 7 trustee because of the debtors’ allegations that there was a conflict of interest between the trustee and the assets of the bankruptcy estate. The United States Bankruptcy Court for the District of New Jersey denied the debtors’ motion for a hearing. The District Court dismissed the debtors’ appeal from the order because the debtors failed to follow the procedural requirements of Fed. R. Bankr. P. 8001(a). The debtors also filed a motion for reconsideration, which the District Court denied. The debtors then filed a timely notice of appeal to the United States Court of Appeals for the Third Circuit. The threshold question before the Third Circuit was whether the Bankruptcy Court order was a final order over which the District Court and Third Circuit possessed jurisdiction under 28 U.S.C. § 158.

Under section 158(d), a United States Circuit Court of Appeals only possesses jurisdiction over an appeal from a final order; the Court lacks jurisdiction over appeals from interlocutory orders. The inquiry, therefore, was whether the Bankruptcy Court order was final.

The Third Circuit held that the Bankruptcy Court order was interlocutory because it did not dispose of any discrete claim or cause of action. Instead, it related only to the conduct of litigation before the Court, and was therefore not a final, appealable order. Accordingly, the Court held that it lacked jurisdiction under section 158(d), and dismissed the appeal on that basis.

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

Case Number	Debtor Name	Judge Assigned to Case	Date Case Filed
08-10212	Wickes Holdings, LLC	The Honorable Kevin J. Carey	2/3/2008
08-10213	Wickes Furniture Company, Inc.	The Honorable Kevin J. Carey	2/3/2008
08-10256	Holley Performance Products Inc.	The Honorable Peter J. Walsh	2/11/2008
08-10257	KHPP Holdings, Inc.	The Honorable Peter J. Walsh	2/11/2008
08-10258	Holley Performance Systems, Inc.	The Honorable Peter J. Walsh	2/11/2008
08-10259	Nitrous Oxide Systems, Inc.	The Honorable Peter J. Walsh	2/11/2008
08-10260	Weiand Automotive Industries, Inc.	The Honorable Peter J. Walsh	2/11/2008
08-10289	Charys Holding Company, Inc	The Honorable Brendan L. Shannon	2/14/2008
08-10290	Crochet & Borel Services, Inc.	The Honorable Brendan L. Shannon	2/14/2008
08-10319	Thompson Products, Inc.	The Honorable Peter J. Walsh	2/19/2008
08-10320	Thompson Products Holdings, Inc.	The Honorable Peter J. Walsh	2/19/2008
08-10321	Harvest Holdings, LLC	The Honorable Peter J. Walsh	2/19/2008
08-10322	Sharper Image Corporation	The Honorable Kevin Gross	2/19/2008
08-10323	Lillian Vernon Corporation	The Honorable Brendan L. Shannon	2/20/2008
08-10324	LV Catalog Holding Corp.	The Honorable Brendan L. Shannon	2/20/2008
08-10325	Lillian Vernon International Ltd.	The Honorable Brendan L. Shannon	2/20/2008
08-10326	LVC Retail Corporation	The Honorable Brendan L. Shannon	2/20/2008
08-10327	The Corporate Solution Inc.	The Honorable Brendan L. Shannon	2/20/2008
08-10328	Everyday Celebrations, Inc.	The Honorable Brendan L. Shannon	2/20/2008
08-10329	Rue de France, Inc.	The Honorable Brendan L. Shannon	2/20/2008
08-10446	Leiner Health Products Inc.	The Honorable Kevin J. Carey	3/10/2008
08-10447	LHP Holding Corp.	The Honorable Kevin J. Carey	3/10/2008
08-10448	Leiner Health Products, LLC	The Honorable Kevin J. Carey	3/10/2008
08-10449	Leiner Health Services Corp.	The Honorable Kevin J. Carey	3/10/2008
08-10462	Terisa Systems, Inc.	The Honorable Christopher S. Sontchi	3/10/2008
08-10463	SPYRUS, Inc.	The Honorable Christopher S. Sontchi	3/10/2008
08-10464	Blue Money Software, inc.	The Honorable Christopher S. Sontchi	3/10/2008
08-10498	Powermate Holding Corp.	The Honorable Kevin Gross	3/17/2008
08-10499	Powermate Corporation	The Honorable Kevin Gross	3/17/2008
08-10500	Powermate International, Inc.	The Honorable Kevin Gross	3/17/2008
08-10516	Smidth & Co.	The Honorable Kevin Gross	3/19/2008
08-10528	Pacificnet, Inc.	The Honorable Mary F. Walrath	3/22/2008
08-10544	Hoop Holdings, LLC	The Honorable Brendan L. Shannon	3/26/2008
08-10545	Hoop Retail Stores, LLC	The Honorable Brendan L. Shannon	3/26/2008
08-10546	Hoop Canada Holdings, Inc.	The Honorable Brendan L. Shannon	3/26/2008
08-10600	Movida Communications, Inc.	The Honorable Brendan L. Shannon	3/31/2008
08-10601	Diamond Glass, Inc.	The Honorable Christopher S. Sontchi	4/1/2008
08-10602	DT Subsidiary Corp.	The Honorable Christopher S. Sontchi	4/1/2008
08-10623	VI Acquisition Corp.	The Honorable Kevin Gross	4/3/2008
08-10624	VICORP Restaurants, Inc.	The Honorable Kevin Gross	4/3/2008
08-10637	Skybus Airlines, Inc.	The Honorable Christopher S. Sontchi	4/5/2008
08-10668	CFM U.S. Corporation	The Honorable Kevin J. Carey	4/9/2008
08-10669	CFM Majestic U.S. Holdings, Inc.	The Honorable Kevin J. Carey	4/9/2008
08-10727	Dan River Inc.	The Honorable Brendan L. Shannon	4/20/2008
08-10728	Dan River Factory Stores, Inc.	The Honorable Brendan L. Shannon	4/20/2008
08-10729	Dan River International Ltd.	The Honorable Brendan L. Shannon	4/20/2008
08-10730	The Bibb Company LLC	The Honorable Brendan L. Shannon	4/20/2008
08-10832	Linens Holding Co.	The Honorable Christopher S. Sontchi	5/2/2008
08-10833	Linens 'n Things, Inc.	The Honorable Christopher S. Sontchi	5/2/2008
08-10834	Linens 'n Things Center, Inc.	The Honorable Christopher S. Sontchi	5/2/2008
08-10835	Bloomington, MN., L.T., Inc.	The Honorable Christopher S. Sontchi	5/2/2008
08-10836	Vendor Finance, LLC	The Honorable Christopher S. Sontchi	5/2/2008
08-10837	LNT, Inc.	The Honorable Christopher S. Sontchi	5/2/2008
08-10838	LNT Services, Inc.	The Honorable Christopher S. Sontchi	5/2/2008
08-10839	LNT Leasing II, LLC	The Honorable Christopher S. Sontchi	5/2/2008
08-10840	LNT West, Inc.	The Honorable Christopher S. Sontchi	5/2/2008
08-10841	LNT Virginia LLC	The Honorable Christopher S. Sontchi	5/2/2008
08-10842	LNT Merchandising Company LLC	The Honorable Christopher S. Sontchi	5/2/2008
08-10843	LNT Leasing III, LLC	The Honorable Christopher S. Sontchi	5/2/2008
08-10844	Citadel LNT, LLC	The Honorable Christopher S. Sontchi	5/2/2008
08-10856	Tropicana Entertainment, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10857	Aztar Corporation	The Honorable Kevin J. Carey	5/5/2008
08-10858	Argosy of Louisiana, Inc.	The Honorable Kevin J. Carey	5/5/2008
08-10859	Aztar Development Corporation	The Honorable Kevin J. Carey	5/5/2008
08-10860	Atlantic-Deauville, Inc.	The Honorable Kevin J. Carey	5/5/2008
08-10861	Aztar Indiana Gaming Company, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10862	Jazz Enterprises, Inc.	The Honorable Kevin J. Carey	5/5/2008
08-10863	Aztar Indiana Gaming Corporation	The Honorable Kevin J. Carey	5/5/2008
08-10864	JMBS Casino LLC	The Honorable Kevin J. Carey	5/5/2008
08-10865	Ramada New Jersey Holdings Corporation	The Honorable Kevin J. Carey	5/5/2008
08-10866	Aztar Missouri Gaming Corporation	The Honorable Kevin J. Carey	5/5/2008
08-10867	Aztar Riverboat Holding Company, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10868	Ramada New Jersey, Inc.	The Honorable Kevin J. Carey	5/5/2008
08-10869	St. Louis Riverboat Entertainment, Inc.	The Honorable Kevin J. Carey	5/5/2008
08-10870	Catfish Queen Partnership in Commendam	The Honorable Kevin J. Carey	5/5/2008
08-10871	Catfish Queen Partnership in Commendam	The Honorable Kevin J. Carey	5/5/2008
08-10872	Tahoe Horizon, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10873	Columbia Properties Laughlin, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10874	Tropicana Development Company, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10875	Columbia Properties Tahoe, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10876	Tropicana Entertainment Holdings, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10877	Columbia Properties Vicksburg, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10878	Tropicana Entertainment Intermediate Holdings, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10879	CP Baton Rouge Casino, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10880	Tropicana Express, Inc.	The Honorable Kevin J. Carey	5/5/2008
08-10881	CP Laughlin Realty, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10882	Tropicana Finance Corp.	The Honorable Kevin J. Carey	5/5/2008
08-10883	Hotel Ramada of Nevada	The Honorable Kevin J. Carey	5/5/2008
08-10884	Tropicana Las Vegas Holdings, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10885	Adamar Garage Corporation	The Honorable Kevin J. Carey	5/5/2008
08-10886	Tropicana Las Vegas Resort and Casino, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10887	Tropicana Real Estate Company, LLC	The Honorable Kevin J. Carey	5/5/2008
08-10888	Adamar of Nevada	The Honorable Kevin J. Carey	5/5/2008
08-10889	Tropicana Enterprises	The Honorable Kevin J. Carey	5/5/2008
08-10890	Hilex Poly Co. LLC	The Honorable Kevin J. Carey	5/5/2008
08-10891	Hilex Poly Holding Co. LLC	The Honorable Kevin J. Carey	5/5/2008
08-10915	KMPH (TV) License, LLC	The Honorable Peter J. Walsh	5/10/2008
08-10916	Pappas Telecasting Incorporated	The Honorable Peter J. Walsh	5/10/2008
08-10917	Pappas Telecasting of the Midlands, L.P.	The Honorable Peter J. Walsh	5/10/2008
08-10918	WCWG of the Triad, LLC	The Honorable Peter J. Walsh	5/10/2008
08-10919	Pappas Telecasting of Sioux City, L.P.	The Honorable Peter J. Walsh	5/10/2008
08-10920	Pappas Telecasting of Houston, L.P.	The Honorable Peter J. Walsh	5/10/2008
08-10921	Pappas Telecasting of El Paso-Juarez, L.P.	The Honorable Peter J. Walsh	5/10/2008
08-10922	Pappas Telecasting of Nevada, L.P.	The Honorable Peter J. Walsh	5/10/2008
08-10923	Pappas Telecasting of Siouxland, LLC	The Honorable Peter J. Walsh	5/10/2008
08-10924	CASA of Washington, LLC	The Honorable Peter J. Walsh	5/10/2008
08-10925	KTNC License, LLC	The Honorable Peter J. Walsh	5/10/2008
08-10926	KPTM (TV) License, LLC	The Honorable Peter J. Walsh	5/10/2008
08-10927	WCWG License, LLC	The Honorable Peter J. Walsh	5/10/2008
08-10928	KPTH License, LLC	The Honorable Peter J. Walsh	5/10/2008
08-10929	KAZH License, LLC	The Honorable Peter J. Walsh	5/10/2008
08-10930	KDBC License, LLC	The Honorable Peter J. Walsh	5/10/2008
08-10931	Reno License, LLC	The Honorable Peter J. Walsh	5/10/2008
08-10932	KCWK License, LLC	The Honorable Peter J. Walsh	5/10/2008
08-10933	KFRE (TV) License, LLC	The Honorable Peter J. Walsh	5/10/2008
08-10934	Pappas Telecasting of Central California	The Honorable Peter J. Walsh	5/10/2008
08-10935	Concord License, LLC	The Honorable Peter J. Walsh	5/10/2008
08-10936	Pappas Telecasting of Concord, a California Limite	The Honorable Peter J. Walsh	5/10/2008
08-10960	IdleAire Technologies Corporation	The Honorable Kevin Gross	5/12/2008
08-11006	Jevic Holding Corp.	The Honorable Brendan L. Shannon	5/20/2008
08-11007	Creek Road Properties, LLC	The Honorable Brendan L. Shannon	5/20/2008
08-11008	Jevic Transportation, Inc.	The Honorable Brendan L. Shannon	5/20/2008
08-11033	Uni Realty of Wilkes-Barre, Inc.	The Honorable Mary F. Walrath	5/29/2008
08-11034	Uni-Marts Ohio, LLC	The Honorable Mary F. Walrath	5/29/2008
08-11035	Uni Realty of Wilkes-Barre, L.P.	The Honorable Mary F. Walrath	5/29/2008
08-11036	Uni Realty of Luzerne, Inc.	The Honorable Mary F. Walrath	5/29/2008
08-11037	Uni-Marts, LLC	The Honorable Mary F. Walrath	5/29/2008
08-11038	Uni Realty of Luzerne, L.P.	The Honorable Mary F. Walrath	5/29/2008
08-11039	Green Valley National Accounts, LLC	The Honorable Mary F. Walrath	5/29/2008
08-11101	Distributed Energy Systems Corp.	The Honorable Kevin Gross	6/4/2008
08-11102	Northern Power Systems, Inc.	The Honorable Kevin Gross	6/4/2008
08-11111	LandSource Communities Development LLC	The Honorable Kevin J. Carey	6/8/2008
08-11112	California Land Company	The Honorable Kevin J. Carey	6/8/2008
08-11113	Friendswood Development Company, LLC	The Honorable Kevin J. Carey	6/8/2008
08-11114	Lennar Land Partners II	The Honorable Kevin J. Carey	6/8/2008
08-11115	Kings Wood Development Company, L.C.	The Honorable Kevin J. Carey	6/8/2008
08-11116	LSC Associates, LLC	The Honorable Kevin J. Carey	6/8/2008
08-11117	Lennar Mare Island, LLC	The Honorable Kevin J. Carey	6/8/2008
08-11118	LandSource Communities Development Sub LLC	The Honorable Kevin J. Carey	6/8/2008
08-11119	Lennar Moorpark, LLC	The Honorable Kevin J. Carey	6/8/2008
08-11120	Lennar Stevenson Holdings, L.L.C.	The Honorable Kevin J. Carey	6/8/2008
08-11121	The Newhall Land and Farming Company	The Honorable Kevin J. Carey	6/8/2008
08-11122	LandSource Holding Company, LLC	The Honorable Kevin J. Carey	6/8/2008
08-11123	LNR-Lennar Washington Square, LLC	The Honorable Kevin J. Carey	6/8/2008
08-11124	Lennar Bressi Ranch Venture, LLC	The Honorable Kevin J. Carey	6/8/2008
08-11125	The Newhall Land and Farming Company (A California	The Honorable Kevin J. Carey	6/8/2008
08-11126	NWHL GP LLC	The Honorable Kevin J. Carey	6/8/2008
08-11127	Tournament Players Club at Valencia, LLC	The Honorable Kevin J. Carey	6/8/2008
08-11128	Southwest Communities Development LLC	The Honorable Kevin J. Carey	6/8/2008
08-11129	Valencia Corporation	The Honorable Kevin J. Carey	6/8/2008
08-11130	Stevenson Ranch Venture LLC	The Honorable Kevin J. Carey	6/8/2008
08-11131	Valencia Realty Company	The Honorable Kevin J. Carey	6/8/2008
08-11132	GFC Aircraft Leasing, LLC	The Honorable Christopher S. Sontchi	6/9/2008
08-11133	Goody's Family Clothing, Inc.	The Honorable Christopher S. Sontchi	6/9/2008
08-11134	SYDOOG LLC	The Honorable Christopher S. Sontchi	6/9/2008
08-11135	Trebor of TN, LLC	The Honorable Christopher S. Sontchi	6/9/2008
08-11136	GOFAMCLO LLC	The Honorable Christopher S. Sontchi	6/9/2008
08-11137	Goody's MS, LP	The Honorable Christopher S. Sontchi	6/9/2008
08-11138	GFCTX, L.P.	The Honorable Christopher S. Sontchi	6/9/2008
08-11139	Goody's IN, L.P.	The Honorable Christopher S. Sontchi	6/9/2008
08-11140	GFCTN, L.P.	The Honorable Christopher S. Sontchi	6/9/2008
08-11141	GFCGA, L.P.	The Honorable Christopher S. Sontchi	6/9/2008
08-11142	Goody's Retail MS, L.P.	The Honorable Christopher S. Sontchi	6/9/2008
08-11143	GFC Aircraft Holdings, Inc.	The Honorable Christopher S. Sontchi	6/9/2008
08-11144	GFC Professional Services, LLC	The Honorable Christopher S. Sontchi	6/9/2008
08-11145	GFC Aircraft Management, LLC	The Honorable Christopher S. Sontchi	6/9/2008
08-11146	Goody's Giftco, LLC	The Honorable Christopher S. Sontchi	6/9/2008
08-11147	Goody's ARDC, L.P.	The Honorable Christopher S. Sontchi	6/9/2008
08-11148	Goody's TNDC, L.P.	The Honorable Christopher S. Sontchi	6/9/2008
08-11149	GFCFS, LLC	The Honorable Christopher S. Sontchi	6/9/2008
08-11150	Goody's Holding TN, LLC	The Honorable Christopher S. Sontchi	6/9/2008
08-11151	ISDE, Inc.	The Honorable Christopher S. Sontchi	6/9/2008
08-11178	Immunicon Corporation	The Honorable Kevin J. Carey	6/11/2008
08-11179	Immunicon Europe, Inc.	The Honorable Kevin J. Carey	6/11/2008
08-11180	IMMC Holdings, Inc.	The Honorable Kevin J. Carey	6/11/2008
08-11181	Immunivest Corporation	The Honorable Kevin J. Carey	6/11/2008
08-11253	Progressive Molded Products Inc.	The Honorable Kevin J. Carey	6/20/2008
08-11254	Progressive Molded Products Inc.	The Honorable Kevin J. Carey	6/20/2008
08-11255	THL-PMPL Holding Corp.	The Honorable Kevin J. Carey	6/20/2008
08-11256	Progressive Moulded Products Limited	The Honorable Kevin J. Carey	6/20/2008
08-11261	Whitehall Jewelers Holdings, Inc.	The Honorable Kevin Gross	6/23/2008
08-11262	Whitehall Jewelers, Inc.	The Honorable Kevin Gross	6/23/2008
08-11264	River Oaks Holdings, Inc., a Delaware corporation	The Honorable Brendan L. Shannon	6/23/2008
08-11267	JHT Holdings, Inc.	The Honorable Brendan L. Shannon	6/24/2008
08-11268	JHT Acquisition Corp.	The Honorable Brendan L. Shannon	6/24/2008
08-11269	Automotive Carrier Services Co., LLC	The Honorable Brendan L. Shannon	6/24/2008
08-11270	Unimark LLC	The Honorable Brendan L. Shannon	6/24/2008
08-11271	ATC Leasing Company LLC	The Honorable Brendan L. Shannon	6/24/2008
08-11272	Active Truck Transport LLC	The Honorable Brendan L. Shannon	6/24/2008
08-11273	Equipment Transfer LLC	The Honorable Brendan L. Shannon	6/24/2008
08-11274	Auto Truck Transport Corporation	The Honorable Brendan L. Shannon	6/24/2008
08-11275	Unimark Carhaul, Inc.	The Honorable Brendan L. Shannon	6/24/2008
08-11276	Unimark Truck Transport, Inc.	The Honorable Brendan L. Shannon	6/24/2008
08-11277	HJT Acquisition Corp.	The Honorable Brendan L. Shannon	6/24/2008
08-11278	Johnson-Houston Travel LLC	The Honorable Brendan L. Shannon	6/24/2008
08-11279	Active Acquisition Corp.	The Honorable Brendan L. Shannon	6/24/2008
08-11280	Safety Carrier, Inc.	The Honorable Brendan L. Shannon	6/24/2008
08-11281	Unimark Lowboy Transportation, Inc.	The Honorable Brendan L. Shannon	6/24/2008
08-11282	BO Properties, Inc.	The Honorable Brendan L. Shannon	6/24/2008
08-11283	Active USA, Inc.	The Honorable Brendan L. Shannon	6/24/2008
08-11313	Zestra Laboratories, Inc.	The Honorable Kevin J. Carey	6/29/2008
08-11354	River Oaks Medical Center, L.P.	The Honorable Brendan L. Shannon	7/2/2008
08-11382	National Dry Cleaners Inc.	The Honorable Christopher S. Sontchi	7/7/2008
08-11383	DCI USA, Inc.	The Honorable Christopher S. Sontchi	7/7/2008
08-11384	DCI Management Group Ltd., a California corporation	The Honorable Christopher S. Sontchi	7/7/2008
08-11385	DCI Management Group, Ltd., an Arizona corporation	The Honorable Christopher S. Sontchi	7/7/2008
08-11386	Al Phillips The Cleaner, Inc.	The Honorable Christopher S. Sontchi	7/7/2008
08-11387	Capitol Varsity, Inc.	The Honorable Christopher S. Sontchi	7/7/2008
08-11388	DryClean USA of South Carolina, Inc.	The Honorable Christopher S. Sontchi	7/7/2008
08-11389	DryClean U.S.A. Coastal, Inc.	The Honorable Christopher S. Sontchi	7/7/2008
08-11390	DryClean USA of Georgia, Inc.	The Honorable Christopher S. Sontchi	7/7/2008
08-11391	Tuchman Cleaners, Inc.	The Honorable Christopher S. Sontchi	7/7/2008
08-11392	DCI Management Group, Inc., a Florida corporation	The Honorable Christopher S. Sontchi	7/7/2008
08-11393	Pride Cleaners, Inc.	The Honorable Christopher S. Sontchi	7/7/2008
08-11407	Syntax-Brillian Corporation	The Honorable Brendan L. Shannon	7/8/2008
08-11408	Syntax-Brillian SPE, Inc.	The Honorable Brendan L. Shannon	7/8/2008
08-11409	Syntax Groups Corporation	The Honorable Brendan L. Shannon	7/8/2008
08-11434	CMT America Corp.	The Honorable Christopher S. Sontchi	7/14/2008
08-11435	Western Nonwovens, Inc.	The Honorable Christopher S. Sontchi	7/14/2008
08-11436	Western Synthetic Fiber, Inc.	The Honorable Christopher S. Sontchi	7/14/2008
08-11437	Bonded Fiberloft, Inc.	The Honorable Christopher S. Sontchi	7/14/2008
08-11438	Reliance Products, Inc.	The Honorable Christopher S. Sontchi	7/14/2008
08-11439	Paltex Incorporated	The Honorable Christopher S. Sontchi	7/14/2008
08-11440	Mid-America Fiber Company, Inc.	The Honorable Christopher S. Sontchi	7/14/2008
08-11441	Florida Nonwovens, Inc.	The Honorable Christopher S. Sontchi	7/14/2008
08-11442	Utah Nonwovens, Inc.	The Honorable Christopher S. Sontchi	7/14/2008
08-11443	MAAX Corporation(Chapter 15)	The Honorable Christopher S. Sontchi	7/14/2008
08-11444	MAAX Canada, Inc.(Chapter 15)	The Honorable Christopher S. Sontchi	7/14/2008
08-11445	MAAX-Hydro Swirl Manufacturing Corp. (Chapter 15)	The Honorable Christopher S. Sontchi	7/14/2008
08-11446	4200217 Canada, Inc.(Chapter 15)	The Honorable Christopher S. Sontchi	7/14/2008
08-11447	MAAX Spas (Ontario), Inc. (Chapter 15)	The Honorable Christopher S. Sontchi	7/14/2008
08-11448	MAAX Cabinets, Inc. (Chapter 15)	The Honorable Christopher S. Sontchi	7/14/2008
08-11449	MAAX KSD LLC (Chapter 15)	The Honorable Christopher S. Sontchi	7/14/2008
08-11450	MAAX Midwest, Inc. (Chapter 15)	The Honorable Christopher S. Sontchi	7/14/2008
08-11451	MAAX Spas (Arizona), Inc. (Chapter 15)	The Honorable Christopher S. Sontchi	7/14/2008
08-11452	Aker Plastics Company, Inc. (Chapter 15)	The Honorable Christopher S. Sontchi	7/14/2008
08-11453	Pearl Baths LLC (Chapter 15)	The Honorable Christopher S. Sontchi	7/14/2008
08-11460	Vertis Holdings, Inc.	The Honorable Christopher S. Sontchi	7/15/2008
08-11461	Vertis, Inc.	The Honorable Christopher S. Sontchi	7/15/2008
08-11462	Enteron Group, LLC	The Honorable Christopher S. Sontchi	7/15/2008
08-11463	Webcraft, LLC	The Honorable Christopher S. Sontchi	7/15/2008
08-11464	Vertis Mailing, LLC	The Honorable Christopher S. Sontchi	7/15/2008
08-11465	Webcraft Chemicals, LLC	The Honorable Christopher S. Sontchi	7/15/2008
08-11466	USA Direct, LLC	The Honorable Christopher S. Sontchi	7/15/2008
08-11467	ACG Holdings, Inc.	The Honorable Christopher S. Sontchi	7/15/2008
08-11468	American Color Graphics, Inc.	The Honorable Christopher S. Sontchi	7/15/2008
08-11471	American Images of North America, Inc.	The Honorable Christopher S. Sontchi	7/15/2008
08-11472	Sullivan Marketing, Inc.	The Honorable Christopher S. Sontchi	7/15/2008
08-11474	Sullivan Media Corporation	The Honorable Christopher S. Sontchi	7/15/2008
08-11469	Pierre Holding Corp.	The Honorable Kevin Gross	7/15/2008
08-11473	Chef's Pantry, Inc.	The Honorable Kevin Gross	7/15/2008
08-11475	Clovervale Farms, Inc.	The Honorable Kevin Gross	7/15/2008
08-11476	Clovervale Transportation, Inc.	The Honorable Kevin Gross	7/15/2008
08-11477	PF Management, Inc.	The Honorable Kevin Gross	7/15/2008
08-11478	Fresh Foods Properties, LLC	The Honorable Kevin Gross	7/15/2008
08-11479	Pierre Real Property, LLC	The Honorable Kevin Gross	7/15/2008
08-11480	Pierre Foods, Inc.	The Honorable Kevin Gross	7/15/2008
08-11481	Warfighter Foods, LLC	The Honorable Kevin Gross	7/15/2008
08-11482	Zartic, LLC	The Honorable Kevin Gross	7/15/2008
08-11483	Zartic Real Property, LLC	The Honorable Kevin Gross	7/15/2008
08-11486	Zar Tran, LLC	The Honorable Kevin Gross	7/15/2008
08-11487	Zar Tran Real Property, LLC	The Honorable Kevin Gross	7/15/2008

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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.

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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.

Pope & Talbot operates pulp and wood products businesses in mills located in Oregon, South Dakota and British Columbia.  On October 29, 2007, certain of the debtors in these cases filed for protection from their creditors under Canada's Companies' Creditors Arrangement Act.  Under the CCCA, protections similar to those provided by the Bankruptcy Code's automatic stay  were imposed to the benefit of certain of the debtors.  According to the debtors' declaration filed in support of their first day motions, the debtors received leave from the Canadian court to file these Chapter 11 cases.

The debtors are seeking approval of a sale of three of their wood products businesses to International Forest Products Limited.  They are also seeking approval of a bidding procedures motion with respect to their pulp operations and one of their mills.

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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.

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In re TWA Inc. Post Confirmation Estate, No. 01-00056 (PJW), 2007 WL 2757148 (Bankr. D. Del. Sept. 21, 2007) (Judge Peter J. Walsh)

In this proceeding, the United States Bankruptcy Court for the District of Delaware held that it possessed subject matter jurisdiction to determine the amount of workers’ compensation benefits owed by American Airlines to a former employee of debtor Trans World Airlines. The matter was a core proceeding because it related to a claim filed against the debtor’s estate, even though the debtor was not liable for the claim. However, because the obligation was one assumed by American Airlines under the terms of the Bankruptcy Court’s order approving the sale of TWA’s assets to American, the Bankruptcy Court was required to interpret its own sale order, and thus this was a core proceeding.

In 1986, Salvatore DiGioia, a former employee of debtor Trans World Airlines, Inc, suffered an on-the-job injury, which was classified as creating a permanent total disability by the New York Workers’ Compensation Board. TWA was obligated to pay DiGioia workers’ compensation benefits under its 1983 collective bargaining agreement with DiGioia’s union, and did so until 2001. On January 10, 2001 TWA filed its bankruptcy petition in the United States Bankruptcy Court for the District of Delaware. On March 12, 2001, the Court approved an Asset Purchase Agreement, under which TWA sold substantially all its assets to American Airlines, Inc. That agreement included a conveyance of the obligation to pay DiGioia’s workers’ compensation benefits. However, when TWA’s obligation to pay ended, American did not fulfill its obligation under the APA to make the payments to DiGioia.

In May, 2001, DiGioia filed a proof of claim against TWA for unpaid benefits. In March, 2007, the Court sustained an objection to the proof of claim because the obligation did not belong to the TWA Inc. Post Confirmation Estate. Shortly thereafter, DiGioia filed a motion to compel American to pay the accrued but unpaid workers’ compensation benefits, as well as all future obligations, with cost of living adjustments. American objected to the motion, not on the basis that it had no obligation to pay, but based on its argument that the Court lacked subject matter jurisdiction to determine the amount of compensation owed and the method used to calculate future payments.

The basis of American’s objection was that the Court should not decide whether DiGioia was entitled to cost of living adjustments because this was not a core proceeding under 28 U.S.C. § 157(b), and because the Court lacked “related to” jurisdiction under 28 U.S.C. § 157(c)(1). In support of this position, American argued that the issue is dependent on interpretation of New York state law, did not involve a substantive right under the Bankruptcy Code, and was not a proceeding that could arise only in the context of a bankruptcy case. American further argued that the Court lacked “related to” jurisdiction because the outcome would have no effect on TWA or its estate and did not have a close nexus to the debtor’s bankruptcy plan.

The Court determined that this was a core proceeding under 28 U.S.C. § 157(b)(2)(B), regarding allowance or disallowance of claims against the estate. Although DiGioia’s request for relief was against American and not TWA, the request arose out of his claim against the estate of TWA. The Court also found that it was a core proceeding under 28 U.S.C. § 157(b)(2)(N) because it related to an order approving the sale of property. This dispute required the Court to interpret its own sale order, and the rights and obligations of the parties thereunder. Under Third Circuit precedent, a proceeding is core when it requires the Court to interpret its own sale order.

American also argued that the Court lacked jurisdiction to calculate the amount of future workers’ compensation benefits owed to DiGioia. However, the Court pointed out that American conceded that the Third Circuit’s holding in American Airlines, Inc. v. Robinson (In re Trans World Airlines, Inc.), 180 Fed. Appx. 330 (3d Cir. 2006) was res judicata with respect to American’s liability to DiGioia. In the Robinson case, which presented almost identical facts to those presented in this proceeding, the Bankruptcy Court determined the disputed amount of the liability assumed by American, the allowance of interest, and an undisputed cost of living adjustment. The Third Circuit affirmed the Bankruptcy Court’s findings and exercise of jurisdiction. In the Robinson case, American did not dispute the Court’s jurisdiction to rule on issues other than the existence of liability. The Court found that American’s position in this proceeding was inconsistent with its position in the Robinson matter, and, moreover, seemed to ignore the Third Circuit’s holding in Robinson. Therefore, the Court held that it had subject matter jurisdiction to determine the amount of American’s monthly obligation to DiGioia.

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Asurion Ins. Servs., Inc. v. Amp’d Mobile, Inc. (In re Amp’d Mobile, Inc.),  377 B.R. 478  (Bankr. D. Del. 2007) (Judge Brendan Linehan Shannon)

The United States Bankruptcy Court for the District of Delaware denied a vendor’s request for a determination that funds that the debtor received in connection with a contract between the parties were not property of the estate, and that such funds were held in a constructive trust. The vendor, Asurion Insurance Services, Inc., was party to an agreement with the debtor to offer insurance to the debtor’s customers against loss or damage to the participating customers’ cellular phones. The Court found that there was no fiduciary relationship between Asurion and the debtor so as to warrant a finding that the premium payments the debtor received from its customers were anything other then property of the debtor’s estate.

Prepetition, the debtor/defendant, Amp’d Mobile, Inc., entered into an agreement with plaintiff Asurion Insurance Services, Inc. for Asurion to develop a program to provide insurance to Amp’d customers against loss or damage to their cellular phones. Amp’d agreed to bill its customers for the monthly premiums and remit those funds to Asurion. Asurion separately contracted with Liberty Mutual Insurance Company to provide the actual insurance coverage.

In June, 2007, Asurion filed a motion for relief from the automatic stay to file a complaint against the debtor seeking turnover of the premiums that the debtor had collected from its customers, but had not paid to Asurion. The United States Bankruptcy Court for the District of Delaware granted the motion and scheduled a trial on the limited issue of whether the premiums were property of the estate under 11 U.S.C. § 541. Asurion then filed a complaint against the debtor alleging breach of contract, conversion and breach of fiduciary duty. At the same time, Asurion also filed a motion seeking imposition of a constructive trust and an order requiring the debtor to turn over all premiums to Asurion.

In support of the relief requested in its complaint, Asurion contended that its agreement with the debtor positioned the debtor as a conduit for the premiums that the debtor was required to collect and remit to Asurion. As a conduit, the debtor would have acquired no interest in the premiums. In the alternative, Asurion contended that California insurance law imposed a fiduciary relationship between Asurion and the debtor such that the debtor held the premiums as a fiduciary for Asurion.

The debtor countered that the agreement did not create a fiduciary relationship; instead, there was merely a creditor-debtor relationship between the parties. In support of its argument, the debtor noted that the agreement contained no express language creating a fiduciary relationship or requiring the debtor to segregate the premiums. Also, the debtor was required to pay Asurion without regard to whether the customers actually made the premium payments. The debtor also argued that Asurion had waived its right to enforce the California statutes that may have created a fiduciary relationship, and that the request for a constructive trust must fail because Asurion could not trace any funds in the debtor’s possession to the actual premiums received.

New York law governed the contract. Under New York law, to establish grounds for the imposition of a constructive trust, a party must prove the existence of (i) a confidential or fiduciary relationship; (ii) an express or implied promise; (iii) a transfer of property made in reliance on the promise; and (iv) unjust enrichment. The Court concluded, as a threshold matter, that Asurion was unable to establish that there was a fiduciary relationship. The Court found that the contract lacked any indicia of such a relationship. Examples of such indicia included (i) clear and explicit language in the governing documents; (ii) affirmative statements in the governing documents that the debtor would have no interest in the premiums; (iii) segregation of the premiums; and (iv) a requirement that the debtor remit only those premiums actually received from its customers.

Similarly, Asurion’s argument that the parties intended to be a “conduit” failed because (i) Asurion was under no obligation to segregate, trace or separately account for premiums received; and (ii) Amp’d was required to pay Asurion regardless of whether the debtor's customers paid Amp’d. 

The Court also pointed to the contract between Asurion and Liberty Mutual for evidence that the Amp’d/Asurion contract did not create a fiduciary relationship. In the Liberty Mutual contract, there was express language creating a fiduciary relationship and requiring funds to be segregated. The Court reasoned that Asurion was able to create an express fiduciary relationship, and its failure to do so in the Amp’d agreement was evidence that no such relationship existed.

The Court then considered Asurion’s argument for a statutorily created trust. Under section 1733 of the California Insurance Code, an insurance agent who collects premiums under an insurance policy holds them as a fiduciary for the insurer. These funds are further required to be segregated unless the insurer agreed otherwise, in writing. The Court found that Asurion was not the insurer; Liberty Mutual was. Therefore, only Liberty Mutual could have released the debtor from its obligation to segregate the premium funds. Here, Liberty Mutual provided in writing that a fiduciary relationship did not exist between it and the debtor. As a consequence, Liberty Mutual, and by extension, Asurion, waived the right to assert a fiduciary relationship under section 1733.

Although the Court determined that there was no basis to find the existence of a fiduciary relationship, which was a threshold requirement for the existence of a trust, the Court also stated that a constructive trust could not be imposed because of the absence of an identifiable trust res. Here, the debtor did not segregate the funds arising from premium payments. Therefore, it became Asurion’s burden to trace the funds in the debtor’s commingled accounts. This task was made all but impossible because the accounts into which the premiums and other funds were deposited were swept each day into a general operating account. 

The Court therefore denied Asurion’s requests for a determination that the premiums were not property of the debtor’s estate and for imposition of a constructive trust.

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In re Seven Fields Dev. Corp., 505 F.3d 237 (3d Cir. 2007) (Circuit Judge Morton I. Greenberg)

Creditors of the debtor, Seven Fields Development Corporation, brought an action against an accounting firm employed by the debtor for alleged misconduct occurring during the debtor’s Chapter 11 case, but prior to plan confirmation. The United States Court of Appeals for the Third Circuit found the claims arose in bankruptcy, and the action therefore was a core proceeding. Because the Bankruptcy Court possessed “arising in” jurisdiction, there was no need for the Bankruptcy Court to determine whether the action had a “close nexus” to the bankruptcy case. In dicta, the Third Circuit also decided that when a federal court exercises “related to” jurisdiction, the Court is required to determine whether there is a “close nexus” between the claims asserted and the bankruptcy cases, such determination to be made as of the time that the claims are brought.

This opinion arises out of a bankruptcy case filed in 1986. A group of corporations engaged in real estate development in Seven Fields, Pennsylvania sold investment shares to raise capital. The debtors promised their investors an annual return on their investments. As the debtors became unable to make their payments to the investors, they filed Chapter 11 petitions in the United States Bankruptcy Court for the Western District of Pennsylvania. The Court approved the appointment of Arthur Young & Company (a predecessor of Ernst & Young) to serve as accountants. Young determined that the debtors were insolvent, and that the vast majority of their debt was owed to the investors. The Court approved a plan of reorganization that merged the debtors into a single successor entity, Seven Fields Development Corporation. The plan provided for payment in full to secured and trade creditor claims. The investor class of unsecured creditors received common stock in Seven Fields at a par value equal to 5% of their allowed claims, with the remaining 95% classified as unsecured nondischargable debt. Under the plan, the purpose of Seven Fields was to manage the real estate and seek to achieve maximum returns for the investors. After confirmation of the plan, Seven Fields liquidated its real estate holdings, but did not realize sufficient proceeds to the investors in full. The bankruptcy case later closed.

In 2004, the shareholders filed a complaint against Ernst & Young in the Court of Common Pleas of Butler County, Pennsylvania alleging professional negligence, fraud and deceit and negligent misrepresentation. The complaint alleged that, based upon Young’s advice, a plan was approved and implemented that caused the investors to suffer losses.

Ernst & Young filed a notice of removal of the Butler County action with the clerk of the Bankruptcy Court, removing the case to the United States Bankruptcy Court for the Western District of Pennsylvania. Ernst & Young also filed a motion to dismiss. The shareholders then moved to remand the case back to the state court, or in the alternative, to abstain from exercising jurisdiction.

The Bankruptcy Court, sua sponte, reopened the bankruptcy case and dismissed the case on various substantive grounds. The shareholders appealed, challenging the Bankruptcy Court’s jurisdiction.

The Bankruptcy Court held that it had jurisdiction, under 28 U.S.C. § 1334(b), over the shareholders’ claims because they arose in the bankruptcy case. The claims asserted professional malpractice by a professional approved by and subject to the supervision of the Bankruptcy Court. The Bankruptcy Court further held that it did not need to apply the “close nexus” test set forth in the Third Circuit’s Resorts International case because, in this case, Young was a court-appointed professional providing services during the bankruptcy case, whereas the professionals in Resorts provided post-confirmation services to a litigation trust, not to the debtor. The district court affirmed the Bankruptcy Court’s decision.

On appeal to the Third Circuit, the shareholders argued that the Bankruptcy Court erred by finding that the close nexus test did not apply, based on the Court’s determination that the state law claims arose during the bankruptcy case. The shareholders argued that what mattered was not when the actions occurred, but when the state law claims were asserted. They asserted that the close nexus test applies whenever a state lawsuit is removed to federal court on the basis of a bankruptcy case that was already closed when the state law action was filed. The appellants also contended that the Bankruptcy Court erred when it found that the state law action was a core proceeding under 28 U.S.C. § 157(b).

The Third Circuit affirmed, holding that the “close nexus” test applies only to determine whether a federal court has jurisdictio