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The Delaware Bankruptcy Insider is a premier blog designed to bring its readers a comprehensive analysis of the latest Delaware corporate bankruptcy news and rulings.  Brought to you by Ashby & Geddes, P.A.

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Showing 83 posts by Aaron H. Stulman.

Delaware Bankruptcy Court’s Local Rules For 2017 Now Effective

The Bankruptcy Court for the District of Delaware’s Local Rules for 2017 went effective today, February 1, 2017.  A copy of the 2017 Local Rules can be found here and a redline of the 2017 Local Rules against the 2016 Local Rules can be found here.

This year, the Court is clearly emphasizing cross-border bankruptcy cases.  Not only have the Local Rules been revised where appropriate to incorporate references to “chapter 15 cases” and “foreign representative(s)”, the Court has also fashioned a new rule—Local Rule 9029-2, setting forth the “Guidelines for Communication and Cooperation Between Courts in Cross-Border Insolvency Matters” (the “Guidelines”).  The Guidelines encompass new Part X of the Local Rules and represent the Court’s “best practices” for chapter 15 cases.  The parties are encouraged, but not required, to submit a protocol to the Court consistent with the Guidelines for its review and consideration at the outset of the cross-border case.  The Guidelines describe, among other things, procedural communications for the Court and the foreign court, efficiency in administration of the cross-border case, substantive communications between the courts, Court-orders for appearance in foreign proceedings, and procedures for joint hearings (set forth in “Annex A”).  If you are considering a cross-border representation (or involved in a chapter 15 case), it is advised to give Part X and “Annex A” a thorough review. Read More ›

Committee Professionals’ Carve-Out in DIP Financing Order Not Per Se Limit on Fees

In re Molycorp, Inc., No. 15-11357(CSS), 2017 WL 56703 (Bankr. D. Del. Jan. 5, 2017)

In this Opinion, Judge Sontchi found, among other things, that an unambiguous carve-out provision of a debtor-in-possession financing order (the “DIP Financing Order”) did not cap the professional fees and expenses of the Official Committee of Unsecured Creditors (the “Committee”) given that a plan of reorganization was confirmed.  Moreover, because the Committee’s professional did not agree to different treatment, its fees and expenses were administrative expenses that must be paid in full. Read More ›

Lack of “Scientific Certainty” Does Not Excuse Late Filing of a Proof of Claim

In re W.R. Grace & Co., No. 01-1139 (KG) (Bankr. D. Del. Dec. 28, 2016)

In this Opinion involving the standards for determining whether a party held an asbestos claim and excusable neglect for filing a late claim, the Court rejected Plum Creek Timber Co.’s (the “Claimant”) argument that it lacked “scientific certainty” with respect to its asbestos-related claim against W.R. Grace & Co. (together with its affiliated debtors, the “Debtors”).  Where the Claimant received actual and publication notice of the bar date in the case, the Court found the Claimant should have timely filed its claim even if it was contingent at the time of filing.  The Court also held that the Claimant did not satisfy the standards for excusable neglect and, as a result, granted the Debtors’ motion to enforce the discharge and injunction. Read More ›

Satisfaction of a Prepetition Loan by a DIP Loan Does Not Extinguish Vendor’s Reclamation Rights Under Section 546(c)

In re Reichhold Holdings US, Inc., No. 14-12237 (MFW), 2016 WL 4479286 (Bankr. D. Del. Aug. 24, 2016)

In this Memorandum Opinion, the Court overruled a limited reclamation claims objection asserted by a liquidating trustee, who argued that a creditor’s reclamation rights were cut-off by a postpetition loan that refinanced a prior perfected prepetition loan.  In doing so, the Court sided with the Sixth Circuit Court of Appeals and rejected a line of cases from the Bankruptcy Court for the Southern District of New York. Read More ›

Unredeemed Gift Cards are Not Entitled to Priority Status Under Bankruptcy Code 507(a)(7)

In re City Sports, Inc., No. 15-12054 (KG), 2016 WL 4190090 (Bankr. D. Del. Aug. 4, 2016)

In what the Bankruptcy Court deemed a purely academic issue given the circumstances of the City Sports bankruptcy cases, Judge Gross held that unredeemed gift cards are not entitled to priority status, and instead, are properly classified as general unsecured claims.  In so doing, Judge Gross rejected and disagreed with a previous holding of the Delaware Bankruptcy Court wherein the court found that gift cards fall under the definition of “deposit” and accorded them priority status under the Bankruptcy Code.  See In re WW Warehouse, Inc., 313 B.R. 588, 592 (Bankr. D. Del. 2004) (Rosenthal, J.).  This lengthy Opinion dissects the plain meaning of Bankruptcy Code section 507(a)(7) and related case law before delving into the legislative history for further support. Read More ›

Stock-Based Compensation “Fits Squarely Within” the Bankruptcy Code’s Definition of “Equity Security”

GSE Envtl., Inc. v. Sorrentino (In re GSE Envtl., Inc.), No. 16-50377 (MFW), 2016 WL 3963978 (Bankr. D. Del. July 18, 2016)

In this Opinion, Judge Walrath ruled that stock-based compensation owed to the former chief executive officer (the “Defendant”) of GSE Environmental, Inc. and GSE Holding, Inc. (the “Debtors”) under his employment agreement constitutes an “equity security”, as that term is defined under the Bankruptcy Code.  See Op. at *5; 11 U.S.C. § 101(16). Read More ›

UPDATE – Insider’s Scoop: Recently Appointed Equity Committee’s Professional Fees Preliminarily Capped by Bankruptcy Court

In re Horsehead Corp., No. 16-10287 (Bankr. D. Del. June 20, 2016) (CSS) [Transcript Ruling]

In the Horsehead family of cases, Judge Sontchi ruled, in the context of considering the equity committee professionals’ retention applications, that a preliminary reasonable global cap of $1.75 million on the equity committee’s professional fees was warranted.  See generally Hr’g Tr. 24:17-29:17.  Our previous blog post analyzing the appointment of the equity committee in these cases can be found here.  The Court had stated at a telephonic discovery conference held just a few days prior that it had “serious concerns that the equity committee is overstepping its charge.” Read More ›

Plan Confirmation Principles Not Categorically Applied in the Settlement Context

In re Energy Future Holdings, Corp., No. 15-1591, 2016 WL 2343322 (3d Cir. May 4, 2016)

The Third Circuit recently determined that a settlement in the form of a tender offer did not violate the Bankruptcy Code and was within the Bankruptcy Court’s discretion to approve.  In its ruling, the Court examined whether principles applicable to a plan of reorganization, such as the “equal treatment” rule embodied in 11 U.S.C. § 1123(a)(4), must be categorically applied in the settlement context, and found there is no such requirement.  Nonetheless, the Court affirmed the lower courts’ ruling on the grounds that the settlement in this case provided equal treatment to creditors. Read More ›

“One Nortel” Inches Closer to Final Adjudication of the Allocation Decision—Direct Certification to the Third Circuit Granted

In re Nortel Networks Inc., No. 15-624 (LPS), 2016 WL 2899225 (D. Del. May 17, 2016)

After the Court of Appeal for Ontario denied any further appeal to the Allocation Decision in the Canadian proceeding as a “barrier to progress”, the Delaware District Court, acting sua sponte, directed the parties to submit letter briefs on the issue of whether the District Court should grant direct certification to the Third Circuit.  Having both the benefit of the Ontario Court’s denial of further appeals, and the appeals themselves, Chief Judge Stark granted certification of an appeal of the Allocation Decision to the Third Circuit because the case involves a matter of public importance and certification will materially advance the case. Read More ›

The Threshold Necessary for a “Substantial Contribution” Finding under Bankruptcy Code Section 503(b)(3)(D) is “Exceedingly Narrow” in Delaware

In re RS Legacy Corp., No. 15-10197, 2016 WL 1084400 (Bankr. D. Del. Mar. 17, 2016) (BLS)

In this Opinion, Judge Shannon denied an individual’s request for allowance and payment of an administrative expense claim for his substantial contribution to the case under Bankruptcy Code section 503(b)(3)(D) in the amount of $203,105.51, which consists of his counsel’s fees and expenses.  In so holding, the Court followed a well-developed body of case law showing that the threshold necessary for a contribution to be “substantial” is exceedingly narrow and such efforts cannot be self-interested. Read More ›