Analysis

Del. Chancery Cracks Down On Non-Bankruptcy Bankruptcies

By Leslie A. Pappas (May 19, 2022, 8:17 PM EDT) -- A vice chancellor's swift denial of an unusual request that a company winding down in a state liquidation get a stay of litigation comparable to that in the federal Bankruptcy Code is a signal to companies seeking bankruptcy alternatives in Delaware that Chancery Court may have had enough.

Within hours of its filing, Vice Chancellor Paul A. Fioravanti Jr. denied the motion from Kidbox.com Inc, an e-commerce company that asked for the stay as part of its assignment for the benefit of creditors proceeding, or ABC, saying the company offered no grounds for a stay or supporting information for the need...

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