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Bankruptcy
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May 16, 2012
Don King's Co. Sends Rothstein Clawback To District Court
A fraudulent transfer suit brought against Don King Productions Inc. by the Chapter 11 trustee of Ponzi schemer Scott Rothstein's defunct law firm can be removed to district court, a Florida judge ruled Tuesday, but discovery and nondispositive pretrial motions will remain in bankruptcy court.
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May 16, 2012
Nonunion AMR Employees Can't Fend Off Wage Change
A New York bankruptcy judge on Wednesday rejected American Airlines Inc. passenger service agents' bid to bar the airline from unilaterally modifying their wages and benefits, dealing a blow to the workers, who are not currently represented by a union.
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May 16, 2012
Pinnacle Judge Approves $74M DIP Loan From Delta
A New York bankruptcy judge on Wednesday approved Pinnacle Airlines Corp.'s $74.3 million debtor-in-possession package from Delta Air Lines Inc. over objections from equity holders, which had argued that the loan is a shotgun deal that comes with too many strings attached.
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May 16, 2012
IBM Demands Sanctions For CEO No-Show In Antitrust Row
IBM Corp. asked a Florida federal judge on Wednesday to sanction QSGI Inc. for its CEO's failure to show up at a scheduled deposition in QSGI's suit alleging that IBM created a monopoly that drove the mainframe reseller into bankruptcy.
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May 16, 2012
Specialty Products' Asbestos Creditors Float Ch. 11 Plan
Creditors with claims for asbestos-related health problems proposed the initial reorganization plan for Specialty Products Holdings Corp. on Monday, hoping to jump-start a case stalled by the difficulty of estimating the bankrupt company’s massive asbestos liability.
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May 15, 2012
ABN Amro, Other Madoff Funds To Get Review By NY Judge
A New York federal judge on Tuesday agreed to review a slew of cases against Bernard Madoff feeder funds, as well as ABN Amro Bank (Ireland) Ltd., in order to consider tax and securities issues contained within them that involve nonbankruptcy law.
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May 15, 2012
Suit Over DLA Piper Fees Will Stay In Bankruptcy Court
An Indiana federal judge on Tuesday refused to take on a case from bankruptcy court seeking to claw back $1.3 million in fees that DLA Piper LLP earned advising on a 2006 leveraged buyout that allegedly left Heartland Memorial Hospital LLC insolvent.
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May 15, 2012
Harrisburg City Council Can't Revive Ch. 9 Bid In 3rd Circ.
The city council of Harrisburg, Pa., on Tuesday lost another round in its battle to declare bankruptcy on behalf of the state capital, as the Third Circuit denied its latest attempt to revive its original Chapter 9 filing.
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May 15, 2012
LightSquared Scores Access To $15M In Cash On 1st Day
A New York bankruptcy judge on Tuesday approved all of struggling wireless communications startup LightSquared Inc.'s first-day motions, enabling the new debtor to continue to operate during the early days of its bankruptcy through the use of $15 million in cash.
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May 15, 2012
Tronox Trial Opens With Tales Of Doomed-To-Fail Co.
The years-in-the-making trial between a Tronox Inc. litigation trust and former Tronox parent Kerr-McGee Corp. kicked off Tuesday in New York bankruptcy court, with attorneys for both sides sparring over whether a 2006 spinoff of the debtor constituted a fraudulent transfer.
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May 15, 2012
11th Circ. Backs Broad Fraudulent-Transfer Liability
A bankruptcy court may force a creditor to disgorge funds it received from a debtor if the funds were acquired through a fraudulent transfer, the Eleventh Circuit ruled Tuesday in a published decision that backed a broad view of liability while ruling against entities that lent money to homebuilder Tousa Inc.
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May 15, 2012
ResCap To Cease Funding $1.7B In Home Equity Credit Lines
Residential Capital LLC, the troubled mortgage unit of Ally Financial Inc. that entered into a prepackaged bankruptcy Monday, won permission from a bankruptcy judge Tuesday to inform customers it will stop funding $1.7 billion in consumer home equity lines of credit.
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May 15, 2012
AES Rips Utility For Protesting $240M Power Plant Sale
Bankrupt AES Eastern Energy LP accused a New York utility on Monday of improperly taking a contract dispute with the company to regulators weighing approval of the $240 million sale of AES' two operating power plants.
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May 15, 2012
K&L Gates Malpractice Suit Over Le-Nature's Scam Revived
A Pennsylvania appeals court on Monday revived the Le-Nature's Inc. liquidating trustee's $500 million malpractice suit against law firm K&L Gates LLP for failing to uncover during its internal investigation the massive fraud that brought the company down and landed its CEO in prison.
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May 15, 2012
3rd Circ. Says Ch. 11 Collateral Value Can't Be Hypothetical
When valuing a Chapter 11 debtor’s collateral to determine the amount of a creditor’s secured claim, a bankruptcy court should be guided by the collateral’s fair market value as opposed to hypothetical projections, the Third Circuit said Monday in a precedential decision.
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May 15, 2012
Teamsters Victorious In Hostess Contract Fight
In a victory for the Teamsters union in its battle with Hostess Brands Inc., the New York judge in charge of the company's bankruptcy proceedings ruled Monday that Hostess cannot shed its collective bargaining agreements with the union.
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May 15, 2012
Ruden McClosky Says It Already Paid $4.6M Wells Fargo Debt
Bankrupt law firm Ruden McClosky PA on Monday asked a Florida federal judge to disallow a $4.6 million claim made by Wells Fargo Bank NA, asserting its debt to the bank was satisfied in full when the firm and most of its assets were sold in November.
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May 14, 2012
LightSquared Ch. 11 Won't Halt Falcone Fraud Claims
Harbinger Capital Management LLC head Philip Falcone may have breathed a temporary sigh of relief Monday when his troubled wireless startup LightSquared Inc. filed for bankruptcy protection, but the move won’t save him from fraud claims by angry Harbinger shareholders, experts say.
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May 14, 2012
RSUI Looks To Sink BankUnited Execs' D&O Policy Claims
RSUI Indemnity Co. told a Florida bankruptcy judge Thursday it is not liable for the defense costs of directors and officers of now-reorganized BankUnited Financial Corp. related to an investor class action and several investigations, saying their alleged misdeeds predated the $10 million policy’s coverage period.
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May 14, 2012
Gaia, Starwood Invest $22.5M In Multifamily Portfolio
Real estate investment manager Gaia Real Estate Holdings LLC announced Monday that it has teamed up with an affiliate of private equity firm Starwood Capital Group to invest $22.5 million in a 9,500-unit multifamily portfolio from bankrupt competitor PJ Finance Co. LLC.
Expert Analysis
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Case Study: In Re Hartford Computer Hardware
In Re Hartford Computer Hardware Inc. provides a window into the distinction between the orders that are available in a plenary case under the Canadian Companies’ Creditors Arrangement Act compared with the orders that can be recognized under Part IV of the act. Clearly, Canadian courts are very sensitive to the need for close cooperation with U.S. courts in cross-border insolvency matters, say Steven Golick and Patrick Riesterer of Osler Hoskin & Harcourt LLP.
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Circuit Split? Mirant Vs. Adelphia
The Fifth Circuit decision in In re Mirant Corp. appears to be in direct conflict with Adelphia Recovery Trust v. Bank of America NA, but a closer analysis reveals that the two decisions are reconcilable. Unfortunately, the court in Mirant adopted legal conclusions without much analysis — or any mention of the analysis provided by Adelphia — making the status of this area of law unclear, says Vincent Roldan of Vandenberg & Feliu LLP.
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Where Rubber Hits Road: Examples Of Alternative Fees
Creating new approaches to fee agreements is something to embrace rather than fear — and when structured and managed correctly, it can be financially advantageous. Take, for example, fixed-fee arrangements, result-based billing and portfolio billing, say Bill Rudnick and Keith Maziarek of DLA Piper.
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A Call To Arms — 365(n) And Trademark Licensees
The Seventh Circuit decision in In re Lakewood Engineering & Manufacturing Co. Inc. is much anticipated and will be extremely important for trademark licensees. It will, however, be even more important as a guide for statutory construction and the appropriate use of legislative history, say Victor Vilaplana and Matt Riopelle of Foley & Lardner LLP.
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Vitro: Defining 'Manifestly Contrary' To US Policy
Since the enactment of Chapter 15 in 2005, relatively few courts have addressed what would be "manifestly contrary" to United States public policy. But it is likely that the Bankruptcy Court for the Northern District of Texas will be asked to address the public policy exception when it considers recognition of the Mexican concurso of Vitro SAB de CV, say attorneys with Chadbourne & Parke LLP.
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Awaiting 6th Circ. Clarity On Chrysler Dealers' Appeal
The Sixth Circuit’s eventual decision in Chrysler Group LLC v. South Holland Dodge will have significant ramifications for the rights and remedies available to GM and Chrysler dealers who had their sales and service agreements rejected prior to or in the aftermath of GM and Chrysler’s 2009 bankruptcies, says F. Maximilian Czernin of Squire Sanders LLP.
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Will SLVs Hold Water In Shipping Bankruptcies?
The Third Circuit decision in the Trans World Airlines bankruptcy presents obstacles for ship owners seeking to enforce a stipulated loss value-based damages claim that is disproportionate to actual damages. The holding that market risk should not be borne by the lessee could be particularly relevant in shipping cases given the current oversupply of ships, say Suzzanne Uhland and Andrew Parlen of O'Melveny & Myers LLP.
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Predictive Coding — Putting The Cart Before The Horse
Many providers and pundits may focus on the Kleen Products LLC v. Packaging Corporation of America case currently pending in Illinois as proof of either judicial acceptance or rejection of predictive coding. But the need for parties to act reasonably in litigation and e-discovery trumps any debate over the use of new technologies, says Christina Zachariason of Navigant Consulting Inc.
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Case Study: In Re Northstar Development
The recent New York bankruptcy court opinion in In re Northstar Development Corp. highlights the dichotomy of interests between insolvent, closely held companies and their controlling shareholders, and should serve as a cautionary tale for the latter, say Paul Rubin and Adam Wolper of Herrick Feinstein LLP.
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9th Circ. Firsts: Equitable Mootness And Arbitration
2012 is shaping up as a year of bankruptcy first impressions for the Ninth Circuit. The court has sailed into uncharted bankruptcy waters twice already this year in the same Chapter 11 case — In re Thorpe Insulation Co., say attorneys with Jones Day.