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Showing 14 posts by Benjamin Wilson Keenan.

Tribal Sovereign Immunity Bars Preference Claims Against Casinos Subject to Recoupment Rights

Casino Caribbean, LLC v. Money Ctrs. of Am., Inc. (In re Money Ctrs. of Am., Inc.), Adv. Nos. 14-50437 (CSS), 16-50410 (CSS), 2017 WL 775780 (Bankr. D. Del. Feb. 28, 2017)

In this Opinion, the Delaware Bankruptcy Court addressed for the first time whether tribal sovereign immunity bars preference actions against casinos operated by (or on behalf of) Indian tribes.  After considering split authority from other jurisdictions, the Court ruled that it does, although the right to use preference liability defensively in support of a recoupment claim may still be preserved. Read More ›

Set Off of Administrative Claim Against Preference Liability is Permissible and Not a “Disguised New Value Defense”

Official Comm. of Unsecured Creditors of Quantum Foods, LLC v. Tyson Foods, Inc. (In re Quantum Foods, LLC), No. 15-50254 (KJC), 2016 WL 4011727 (Bankr. D. Del. July 25, 2016)

In this Opinion, the Delaware Bankruptcy Court addressed a question that remained in the wake of the Third Circuit’s Opinion in Friedman’s: although post-petition goods and services may not be counted as subsequent new value under section 547(c)(4) of the Bankruptcy Code, may they still be used to offset alleged preference liability?  See Friedman’s Liquidating Tr. v. Roth Staffing Co., LP (In re Friedman’s Inc.), 738 F.3d 547 (3d Cir. 2013).  In answering this question of first impression, the Court ruled that they may.  In its holding, the Court also confirmed earlier rulings that section 502(d) may not be used to disallow administrative claims. Read More ›

Court Dismisses Involuntary Chapter 11 Case on Findings of Bad Faith and Failure to Meet Standards under Section 303

In re Metrogate, LLC, No. 15-12593 (KJC), 2016 WL 3150177 (Bankr. D. Del. May 26, 2016), (with note regarding In re Diamondhead Casino Corp., No. 15-11647 (LSS), 2016 WL 3284674 (Bankr. D. Del. June 7, 2016))

In this Opinion, the Delaware Bankruptcy Court dismissed an involuntary chapter 11 case against Metrogate, LLC f/k/a Advance Realty Group, LLC (“Metrogate”) on findings that it failed to meet the standards under section 303 of the Bankruptcy Code and was filed in bad faith.  Judge Kevin J. Carey’s ruling clarified statutory requirements under section 303 and confirmed bad faith as an independent ground for dismissal of involuntary cases under the Third Circuit’s holding in In re Forever Green Ath. Fields, Inc., 804 F.3d 328 (3d Cir. 2015). Read More ›

Third Circuit Holds that Minimum Threshold under Section 547(c)(9) Requires Transfer-by-Transfer Analysis

Slobodian v. U.S. Internal Revenue Serv. (In re Net Pay Solutions, Inc.), No. 15-2833, 2016 WL 2731676 (3d. Cir. May 10, 2016)

In this precedential Opinion, the United States Court of Appeals for the Third Circuit (the “Third Circuit”) addressed whether multiple transfers may be aggregated for purposes of meeting the statutory minimum under section 547(c)(9) of the Bankruptcy Code.  The Court affirmed the ruling of the United States District Court for the Middle District of Pennsylvania (the “District Court”) that they may not be aggregated where the transfers are for the benefit of different creditors on distinct debts. The Court also addressed whether employee withholding taxes paid to the IRS by a payroll management company on behalf of an employer are immune from avoidance as “trust fund” taxes under 28 U.S.C. §7501(a), and held that they are. Read More ›

Practice Point: Substance Matters – Recent Rulings Confirm and Clarify Pleading Standards under Section 547

THQ, Inc. v. Starcom Worldwide, Inc. (In re THQ, Inc.), No. 14-51079 (MFW), 2016 WL 1599798 (Bankr. D. Del. Apr. 18, 2016).

Giuliano v. Haskett, (In re MCG Ltd. P’ship), No. 14-50536 (CSS), 545 B.R. 74 (Bankr. D. Del. Jan. 28, 2016).

Two recent rulings by the Delaware Bankruptcy Court confirm the well-known pleading standards that a preference complaint must do more than “merely parrot[] the language of section 547” to survive a motion to dismiss.  The cases also clarify the type of particularized facts that must be alleged to state a claim under section 547. Read More ›

Absent Other Unusual Factors, Evidence of Timing Range May Be Enough to Satisfy Burden Under Section 547(c)(2)(A)

Forman v. Moran Towing Corp. (In re AES Thames, LLC), Case No. 13-50395 (KJC), 2016 WL 853091 (Bankr. D. Del. Mar. 3, 2016)

In this Memorandum, evidence that payments made during the preference period fell within historical ranges was enough for Judge Kevin Carey to rule that the timing was “subjectively” ordinary under section 547(c)(2)(A) of the Bankruptcy Code, even though the average timing compared unfavorably to the parties’ historical dealings.  The Court’s analysis sheds light on the “somewhat unique circumstances” in which a court may emphasize the importance of the range of payment timing for purposes of the ordinary course of business defense. Op. at *4. Read More ›

The Insider’s Scoop: Boomerang Tube Decision Already Endorsed in Delaware

In re Samson Resources, Corp., Case No. 15-11934 (CSS) (Bankr. D. Del. Feb. 8, 2016) [Letter Ruling]

[Update - The Honorable Brendan Linehan Shannon has also followed suit, issuing a letter ruling in In re Gulf Resources, LLC.  Therein, His Honor agreed with Judge Walrath's holding in Boomerang Tube "including comments contained in Footnote 6 of the Opinion applying its rationale to the retention of debtor's counsel."]

The Boomerang Tube decision has already been followed by one other Delaware bankruptcy judge.  In a letter ruling in In re Samson Resources Corp., Judge Christopher S. Sontchi agreed with, endorsed, and applied Judge Walrath’s ruling to deny fee defense provisions in retention applications for debtors’ counsel. Read More ›

Fee Defense Provisions Held Impermissible for Estate Professionals Under Section 328; Argument for Contract Based Exception to ASARCO Rejected

In re Boomerang Tube, Inc.,Case No. 15-11247 (MFW), 2016 WL 385933 (Bankr. D. Del. Jan. 29, 2016)

In this case, the Delaware Bankruptcy Court addressed a question remaining in the wake of the Supreme Court’s ASARCO opinion:  Although fees incurred by debtors’ attorneys in defending challenges to their fees are generally not permitted under section 330 of the Bankruptcy Code, may such fees be approved if they are provided in the attorneys’ retention application under section 328(a)?  See Baker Botts LLP v. ASARCO LLC, 135 S.Ct. 2158 (2015).  In a succinct Opinion, Judge Mary F. Walrath ruled that they may not.  After ASARCO, Her Honor held no “contract exception” remains for fee defense provisions under section 328 even if such provisions would have previously been permitted under Third Circuit precedent. Read More ›

Third Circuit Affirms Debtors’ Right to Reject Expired Collective Bargaining Agreement Under Section 1113

In re Trump Entm’t Resorts, Unite Here Local 54, Appellant, No. 14-4807, 2016 WL 191926 (3d. Cir. Jan. 15, 2016), aff’g In re Trump Entm’t Resorts, Inc., 519 B.R. 76 (Bankr. D. Del. 2014)

On direct appeal, the Third Circuit Court of Appeals has affirmed a Delaware Bankruptcy Court ruling (see previous post here) that debtors’ powers under section 1113 of the Bankruptcy Code to reject a collective bargaining agreement remain in effect even if the agreement has expired. Read More ›

District Court Affirms Bankruptcy Court Decision on Ordinary Course of Business and Remands Subsequent New Value and Prejudgment Interest Rulings for Further Findings

Prudential Real Estate v. Burtch (In re AE Liquidation, Inc.), Civ. Nos. 13-1504 & 13-1505 (LPS), 2015 WL 5301553 (D. Del. Sept. 10, 2015), aff’g in part, rev’g in part Burtch v. Prudential Real Estate (In re AE Liquidation, Inc.), Nos. 08-13031 & 10-55543 (MFW), 2013 WL 3778141 (Bankr. D. Del. July 17, 2013)

In this appeal and cross appeal to the Delaware District Court, Judge Leonard P. Stark affirmed a Bankruptcy Court ruling that payments made an average of 17 days faster during the preference period were not eligible for the ordinary course of business defense under section 547(c)(2) of the Bankruptcy Code.  Judge Stark also ruled that, under the Third Circuit’s Opinion in In re Friedman’s, Inc., subsequent new value cannot include post-petition new value, and that bankruptcy judges must provide reasons for denying prejudgment interest in preference cases.  He remanded the latter two issues to the Bankruptcy Court for further findings. Read More ›