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Showing 20 posts recarding Judge Kevin J. Carey.

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 ›

Bankruptcy Court Sidesteps Corporate Governance Issue, Deciding Motion to Dismiss Chapter 11 Cases on Other Grounds

In re Intervention Energy Holdings, LLC, No. 16-11247 (KJC), 2016 WL 3185576 (Bankr. D. Del. June 3, 2016)

In this Opinion, Judge Kevin J. Carey denies a secured creditor and common member’s motion to dismiss the Chapter 11 cases of two Delaware limited liability companies for lack of corporate authority, siding with other federal courts that have “consistently refused to enforce waivers of federal bankruptcy rights.”  Op. at *10.  In doing so, the Court declines “the parties’ invitation to decide what may well be a question of first impression of state law (i.e., determining the scope of LLC members’ freedom to contract under applicable state law provisions) when an alternate ground for decision is present.”  Id. at *6. 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 ›

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 ›

Unsecured Creditor Not Entitled to Postpetition Attorney’s Fees Provided For Under Enforceable Prepetition Contract

In re Tribune Media Co., No. 08-13141 (KJC), 2015 WL 7307305 (Bankr. D. Del. Nov. 19, 2015)

This Memorandum from the Honorable Kevin J. Carey of the Delaware Bankruptcy Court arose from a dispute over a $30 million unsecured claim for postpetition attorney’s fees and costs (the “Fee Claim”) submitted by an indenture trustee (the “Indenture Trustee”) for certain unsecured subordinated securities issued prepetition by debtor Tribune Company.  According to the Indenture Trustee, its Fee Claim should be allowed under the express terms of the governing indenture as well as the United States Supreme Court decision Travelers Casualty & Surety Company of America v. Pacific Gas & Electric Company, 549 U.S. 443, 452 (2007) (holding that “claims enforceable under applicable state law will be allowed in bankruptcy unless they are expressly disallowed”).  In tackling whether the Fee Claim should be allowed, the Bankruptcy Court acknowledged that the issue presented remains undecided by the Third Circuit Court of Appeals and is one over which courts “have long been divided”.  Op. at *5. Read More ›

Prepetition Claim of Third Party Service Provider for Fringe Benefits Provided to Debtors’ Employees Entitled to Priority Treatment Under Section 507(a)(5) of the Bankruptcy Code

In re Tropicana Entm’t, LLC, No. 08-10856 (KJC), 2015 WL 6112064 (Bankr. D. Del. Oct. 14, 2015)

In a recent post-confirmation dispute arising in the chapter 11 bankruptcy cases of Tropicana Entertainment, LLC and its related entities (collectively, the “Debtors”), the Honorable Kevin J. Carey was faced with a question over which courts are split—whether a prepetition claim asserted by a third party service provider of employee benefits is entitled to priority under section 507(a)(5) of the Bankruptcy Code.  The answer of the Delaware Bankruptcy Court was yes, such a claim may receive priority treatment pursuant to such section so long as it does not exceed the limitations specifically set forth therein. Read More ›

The Baha Mar Debtors Sent Packing Back To The Bahamas

In re Northshore Mainland Servs., Inc., 2015 WL 5444707, Case No. 15-11402 (KJC), --- B.R. ---- (Bankr. D. Del. Sept. 15, 2015)

In His Honor’s most recent Memorandum, Judge Carey dismissed the chapter 11 cases of the Baha Mar debtors (the “Debtors”), except as to one—Northshore Mainland Services, Inc, which is a Delaware corporation with operations in the United States.  Despite the Court’s acknowledgment of the significant benefits to all parties in proceeding with a restructuring under chapter 11, the Court appeared constrained to rule that all parties would be best served by dismissal under Bankruptcy Code section 305(a). Read More ›

Delaware Bankruptcy Court Holds That Discharge Does Not Affect Additional Insured’s Rights to Pursue Indemnification Against Debtors’ Insurer

In re SelectBuild Illinios, LLC, Case No. 09-12085 (KJC), 2015 WL 3452542 (Bankr. D. Del. May 28, 2015)

The Delaware Bankruptcy Court recently denied a Motion to Enforce a Permanent Injunction against a contract counterparty, The Ryland Group, Inc. d/b/a Ryland Homes (“Ryland”), and held that Ryland could seek indemnification as an additional insured from the Reorganized Debtors’ insurer, ACE American Insurance Company (“ACE”). Read More ›

Bankruptcy Court Holds That Debtors May Use Their Setoff or Recoupment Rights (Whether Pre- or Post-Petition) to Reduce, At Their Election, A Creditor’s Secured, Administrative, or General Unsecured Claims

In re ADI Liquidation, Inc., (f/k/a AWI Delaware, Inc.), No. 14-12092 (KJC) (Bankr. D. Del. May 5, 2015)

In this Memorandum, Judge Carey answered an important legal question in the affirmative: whether a debtor can use its setoff or recoupment rights (whether pre- or post-petition) to reduce—at its election—the amount of a creditor’s allowed secured, administrative, or general unsecured claim.  In other words, a debtor may choose to apply a receivable against a creditor’s allowed administrative claim, which is entitled to full payment under a plan, and to preserve the creditor’s general unsecured claim, which may only receive partial payment under a plan. Read More ›

Court Interprets Section 502(b)(6)(A); Holds “15%” A Measure of the Remaining Lease Term and Not a Measure of the Remaining Rent Due Under the Lease

In re Filene’s Basement, LLC, et al., No. 11-13511 (KJC) (Bankr. D. Del. Apr. 16, 2015)

In this Opinion, Delaware Bankruptcy Court Judge Kevin Carey ruled on a question that has evenly divided courts nationwide and remained unanswered by the Third Circuit Court Appeals – namely, whether the “15 percent” referenced in section 502(b)(6)(A) of the Bankruptcy Code refers to the remaining term of a lease or the remaining rent due under a lease.  Read More ›