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Bankruptcy
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May 22, 2013
$211M In Borders Gift Cards Worthless After Ruling
A New York federal judge on Wednesday dismissed appeals by customers who hold gift cards from bankrupt book seller Borders Group Inc. and sought refunds, saying the appeals are moot because the company’s distribution plan can't handle the approximately $210.5 million in claims.
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May 22, 2013
Chem Rx Bosses Ask 2nd Circ. To Toss $106M Clawback Suit
Former principals at bankrupt Chem Rx Corp. urged the Second Circuit on Wednesday to kill a trustee lawsuit aimed at forcing them to give up $106 million they made in the pharmacy’s leveraged buyout.
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May 22, 2013
PE-Owned Ohio Printers Seek Ch. 11 As Buyer Looms
Two Ohio-based sister commercial printing companies, both owned by private equity firm Wellspring Capital Management LLC, filed for Chapter 11 bankruptcy protection Wednesday with a prepacked plan in hand and rival company Bang Printing of Ohio at the ready with a $19 million stalking horse bid.
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May 22, 2013
Atari Seeks OK For Plan To Sell Off Assets Piece By Piece
The U.S. branch of French holding firm Atari SA on Wednesday asked a New York bankruptcy judge to greenlight its plan to sell off its assets piece by piece, after it failed to garner acceptable offers from potential stalking horse buyers to bid on the game maker's entire business.
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May 22, 2013
Convenience Store Supplier Cooper-Booth Enters Ch. 11
Cooper-Booth Wholesale Co., a convenience store supplier serving the Mid-Atlantic, on Tuesday filed for Chapter 11 protection in Pennsylvania, saying its main bank account was seized by the government as part of an investigation into a Cooper-Booth customer that allegedly smuggled cigarettes between states.
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May 22, 2013
Orrick Loses Bid To Flip Heller Ehrman Fraud Transfer Ruling
A California federal district judge on Tuesday rejected Orrick Herrington & Sutcliffe LLP’s argument that a bankruptcy judge lacked authority to make a ruling that the law firm wrongfully hired former partners of defunct Heller Ehrman LLP.
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May 22, 2013
Elpida Aims To Seal $2B Micron Sale With Final Plan Approval
Elpida Memory Inc. urged a Delaware bankruptcy judge Wednesday to recognize its reorganization plan that would cement its $2 billion takeover by Micron Technologies Inc., saying acceptance of the plan is imperative to the companies' future.
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May 22, 2013
Traffic Safety Co. Hits Ch. 11 Looking To Liquidate
Highway Technologies Inc., a provider of traffic safety services and equipment, entered Chapter 11 protection in Delaware bankruptcy court Wednesday looking to liquidate its assets after plans to sell the company as a going concern fell through last week.
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May 22, 2013
KIT Digital's $25M Ch. 11 Deal Delayed By Equity Group
A New York bankruptcy judge on Wednesday said he was inclined to approve three private equity firms’ commitment to put $25 million toward KIT Digital Inc.’s reorganization, but held off on the ruling because of a last-minute announcement that an equity committee is being formed.
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May 22, 2013
3rd Circ. Sides With IRS In Majestic Star Casino Tax Dispute
The Third Circuit on Tuesday overturned a bankruptcy court decision that allowed Majestic Star Casino LLC to escape taxes foisted upon it when the casino operator’s nondebtor parent revoked its “S” corporation status, siding with the U.S. Internal Revenue Service and Majestic Star’s former owner.
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May 22, 2013
Q&A With Jenner & Block's Vincent Lazar
There is no just reason why, after an appropriate period of time, a student loan should not be dischargeable, and the debtor permitted a fresh start, says Vincent Lazar, co-chairman of Jenner & Block LLP's bankruptcy litigation practice.
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May 22, 2013
Lehman Sells $4.2B In Claims Against Brokerage Unit
Collapsed investment bank Lehman Brothers Holdings Inc. on Wednesday said it has agreed to sell $4.22 billion of its general unsecured claims against brokerage affiliate Lehman Brothers Inc., for less than half of their face value.
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May 21, 2013
Feds Oppose Settlement Behind $320M LifeCare Sale
The U.S. government asked a Delaware bankruptcy judge Tuesday to reject a deal underpinning the $320 million sale of private equity-owned LifeCare Holdings Inc., saying the proposed settlement is impermissible because it would pay the hospital group's unsecured creditors ahead of federal tax claims.
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May 21, 2013
KidsPeace Opts For Ch. 11 Amid $100M In Pension Plan Costs
KidsPeace Corp., which operates a psychiatric facility for children, filed for bankruptcy in Pennsylvania on Tuesday due to more than $100 million in pension plan obligations and rollbacks to Medicaid, its largest provider of funds, according to the nonprofit's Chapter 11 filing.
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May 21, 2013
Dreier Investors Say Profits Weren't Part Of Ponzi Scheme
Attorneys for two investors being sued for millions by Dreier LLP's Chapter 11 trustee told a New York bankruptcy judge Tuesday that the trustee can't prove that the profits they received from their investments in the defunct firm were part of a Ponzi scheme.
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May 21, 2013
BNY Mellon Win In Lyondell LBO Case Upheld By NY Court
A New York state appeals court on Tuesday said Bank of New York Mellon Corp. did not breach a fiduciary duty in its handling of Basell AF SCA's leveraged buyout of Lyondell Chemical Co. that bankrupted both companies, affirming a lower court's decision.
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May 21, 2013
Watchdog Report Faults CFTC Head's MF Global Recusal
U.S. Commodity Futures Trading Commission Chairman Gary Gensler disregarded legal advice and needlessly recused himself from matters relating to MF Global Holdings Ltd. in November 2011 over concerns about his personal ties to then-CEO Jon Corzine, according to a Tuesday report.
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May 21, 2013
Revel Finishes Restructuring, Exits Ch. 11
Revel AC Inc. has completed its financial restructuring and emerged from Chapter 11 bankruptcy with lenders now owning an 82 percent stake in the Atlantic City luxury resort and casino, it announced Tuesday.
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May 21, 2013
O'Melveny Lures Another Cadwalader Bankruptcy Attorney
O’Melveny & Myers LLP announced Zach H. Smith has joined its restructuring practice as a partner in its New York office, the fourth bankruptcy attorney the firm has lured from Cadwalader Wickersham & Taft LLP in the last two weeks.
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May 21, 2013
House Panel Advances Asbestos Trust Transparency Bill
The U.S. House Judiciary Committee approved legislation on Tuesday that would require more transparency from trusts set up to disburse insolvent companies' funds to asbestos victims, narrowly defeating amendments from Democrats concerned the bill would threaten victims' privacy.
Expert Analysis
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Contrasting 363 And Out-Of-Court Sales
Excerpt from Lexis Practice Advisor
In most respects, a bankruptcy sale is nearly identical to a sale of assets outside of bankruptcy. The differences lie in five specific areas, says Neil Herman of Morgan Lewis & Bockius LLP.
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A Twist In Terminating German Commercial Agreements
Commercial agreements usually provide for extraordinary termination rights or even automatic cancellation in the case of insolvency of one of the parties. Such a cancellation right may, however, contradict the general principles of German insolvency law, say Dr. Juergen van Kann and Dr. Rouven Redeker of Fried Frank Harris Shriver & Jacobson LLP.
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Harrisburg Demonstrates Danger Of Public Statements
The U.S. Securities and Exchange Commission has long made clear that when information about a municipal issuer is reasonably expected to reach investors and the trading markets, those disclosures are subject to anti-fraud laws. But the recent Harrisburg, Pa., enforcement represents the first time the SEC has charged a municipality for misleading statements made outside of its securities disclosure documents, say attorneys with Day Pitney LLP.
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Rise Of The Machines — Predictive Coding Goes Mainstream
The pros of using predictive coding far outweigh the cons. Given the heavy pressure on law firms and in-house counsel to reduce discovery costs, as well as the Justice Department's recent stance on the subject, it appears predictive coding will continue to emerge from the obscure world of legal technology to the mainstream of legal practice, say Michael Moscato and Myles Bartley of Curtis Mallet-Prevost Colt & Mosle LLP.
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What’s In Store For E-Discovery In Bankruptcy?
As savvy bankruptcy litigators begin to consider the strategic possibilities of spoliation allegations in connection with electronically stored information preservation obligations, the prudent DIP attorney will also consider potential defenses against such tactics. The ABA working group has proposed one such possible solution in the ESI Protocol, says Joanne Lee of Foley & Lardner LLP.
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Understanding The Process For Initiating Ch. 11
Excerpt from Lexis Practice Advisor
A prepackaged Chapter 11 filing consists of three significant groups of pleadings: the administrative pleadings, the “first day” substantive pleadings and the plan-related pleadings. For any company to file and enter into Chapter 11 smoothly, counsel and advisers must work with the company for at least several weeks to conduct due diligence and understand all aspects of the business, says Morris Massel of Simpson Thacher & Bartlett LLP.
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How The Fed's Stress Test Rules Mitigate Systemic Risk
The savings and loan holding company regulatory regime established by the Dodd-Frank Act appears to be having the ultimate effect of reducing the number of SLHCs, especially those that are predominantly insurance enterprises, say attorneys with Debevoise & Plimpton LLP.
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A Tale Of 2 Burdens Of Proof In Ch. 11
As a matter of strategy, it can be vital to understand the differing burdens of proof under various provisions of the Bankruptcy Code and when those burdens shift. For example, the Southern District of New York recently clarified the distinction between section 362(d) and 363(e) burdens of proof in In re AMR Corp., say attorneys with Duane Morris LLP.
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Nuts And Bolts Of Negotiating Forbearance Agreements
Excerpt from Lexis Practice Advisor
When faced with default under a loan agreement, a company may request that the lender forbear for a limited period of time from taking legal actions in order to allow the company time to resolve its financial problems. In such a scenario, parties should consider a number of items in determining whether a forbearance agreement is appropriate, say George South and Daniel Egan of DLA Piper LLP.
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Spotlight On Affiliated Lender Provisions And Debt Buybacks
Over the last few years, provisions in credit agreements permitting the borrower’s equity sponsor and other affiliates to purchase term loans made thereunder and allowing the borrower to “repurchase” such term loans on a non-pro rata basis have become common. But many of the provisions governing such purchases do not adequately protect the non-affiliated lenders’ interests in a bankruptcy of the borrower, say Robert Finley and Ram Burshtine of King & Spalding LLP.