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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 11 posts recarding Judge Laurie Selber Silverstein.

Delaware Bankruptcy Court Finds Debtor Did Not Properly Terminate Contract, Faces Significant Breach of Contract Damages

In re Outer Harbor Terminal, LLC, No. 16-10283 (LSS), 2017 WL 696676 (Bankr. D. Del. Feb. 21, 2017)

In the context of a claims objection, the Court adhered to unambiguous contract language in determining that the presence of a termination triggering event did not automatically terminate a contract, opening the door for potentially significant damages.  This matter will now proceed to the damages phase, where the non-debtor contract counterparty has alleged in its proof of claim an approximate $13.3 million in, among other things, breach of contract damages. Read More ›

Delaware Bankruptcy Court Sidesteps Decision on “Novel” Bar to Joinder Doctrine; Movant Failed to Demonstrate Bad Faith For Involuntary Chapter 7 Petition

In re Luxeyard, Inc., 556 B.R. 627 (Bankr. D. Del. 2016)

Declining to opine upon the “bar to joinder doctrine,” the Delaware Bankruptcy Court in this Opinion applied the Third Circuit’s “totality of the circumstances” bad faith test to deny a motion to bar the joinder of additional petitioners to an involuntary petition under Section 303(c) of the Bankruptcy Code.  Simply put, the Debtor did not carry its burden to show there was a bad faith filing, and therefore, the Court need not consider the bar to joinder doctrine. Read More ›

Pac Sun Class Representative Denied Permission to File Class Proof of Claim on Behalf of Priority Claimants

In re Pacific Sunwear of California, Inc., No. 16-10882 (LSS) (Bankr. D. Del. June 22, 2016 and Aug. 8, 2016)

In the first of two related Opinions, Judge Laurie Selber Silverstein granted claimant Tamaree Beeney permission to file a class proof of claim for alleged violations of California wage and hour laws under California’s Private Attorney General Act (“PAGA”), but limited her representative role to absent class members who hold non-priority general unsecured claims.  In the second Opinion, the Court denied reconsideration of Her Honor’s ruling and further disallowed another claimant from representing the priority class in Ms. Beeney’s absence. 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 ›

The Insider’s Scoop: Boomerang Tube is the Law in the Delaware Bankruptcy Court

In re Magnum Hunter Resources Corp., Case No. 15-12533 (KG) (Bankr. D. Del. Feb. 26, 2016)

In re Newbury Common Assocs., LLC, Case No. 15-12507 (LSS) (Bankr. D. Del. Feb. 29, 2016)

On February 26, 2016, the Honorable Kevin Gross of the Delaware Bankruptcy Court was asked to weigh in on the attorneys’ fees issue recently addressed in Judge Walrath’s Opinion in Boomerang Tube. Read More ›

Non-Consensual Third Party Releases Certified Directly to the Third Circuit

In re Millennium Lab Holdings II, LLC, No. 15-12284 (LSS), 2016 WL 155500 (Bankr. D. Del. Jan. 12, 2016)

[Update - Despite the Bankruptcy Court's ruling, the Third Circuit Court of Appeals denied the petition for direct certification in an order issued February 24, 2016.  The appeal will now head to the Delaware District Court.]

The Delaware Bankruptcy Court has granted direct certification of a hot-button issue surrounding confirmation of plans in bankruptcy to the Third Circuit Court of Appeals—namely, whether a bankruptcy court has the authority to release a non-debtor’s direct clams against other non-debtors without the consent of the releasing non-debtor. Read More ›

The Insider’s Scoop: “Unwise” to Approve Retention of Dechert LLP As Debtors’ Counsel Due to Actual and Potential Conflicts of Interest

In re Newbury Common Assocs., LLC, Case No. 15-12507 (LSS) (Bankr. D. Del. Feb. 12, 2016) [Transcript Ruling]

In a bench ruling, Judge Silverstein denied Newbury Common Associates, LLC’s (and its affiliated debtors, the “Debtors”) application to retain and employ Dechert LLP (“Dechert”) as its bankruptcy counsel.  The Court held that Dechert’s prior representation of certain individuals—William Merritt and Thomas Kelly (the “Individuals”)—in a matter related to the Debtors’ bankruptcy, no matter how short in duration or extent, created an actual conflict of interest.  To the extent there was not an actual conflict, the Court held that it was within its discretion to find that numerous potential conflicts warranted disqualification. Read More ›

Petitioning Creditors Cannot Meet High Burden For “Extreme Remedy” of Appointment of Interim Trustee

In re Diamondhead Casino Corp., 540 B.R. 459 (Bankr. D. Del. Nov. 13, 2015)

In this Memorandum Opinion, Judge Silverstein of Delaware’s Bankruptcy Court held, on a limited record, that the petitioning creditors did not met their burden of proof to show that an interim trustee is necessary during the “gap period”—that is, the period between the filing of the involuntary case and the Court’s decision on whether to enter an order for relief.  In so holding, the Court relied primarily on the undisputed facts that debtor Diamondhead Casino Corporation (“Diamondhead”) is (and has been) a non-operating entity for the past 15 years and that the property value of its sole asset will not dramatically decline in the near future.  Although the Court did not rule upon Diamondhead’s motion to dismiss the involuntary bankruptcy case as a bad faith filing, which remains sub judice, the Court indicated that there is a reasonable likelihood that such relief will be granted. Read More ›

Consummated Plan Based Upon Qualified Bid for Equity Received Pursuant to Sale Process Not “Sale Transaction” for Purposes of Investment Banker’s Retention Agreement

In re Hipcricket, Inc., Case No. 15-10104 (LSS), 2015 WL 5728552 (Bankr. D. Del. Sept. 29, 2015)

In this Memorandum Order, Judge Silverstein approved Canaccord Genuity Inc.’s (“Canaccord”) success fee for its work as an investment banker to Hipcricket, Inc. (the “Debtor”) over an objection of Hal L. Baume (the “Distribution Trustee”).  By the terms of Canaccord’s retention, a success fee was due to it unless a proposed buyer provided debtor in possession financing as part of “a contemplated sale transaction” and such sale transaction was consummated.  In this case, the Distribution Trustee asserted that the consummated plan, which was based upon a qualified bid received for the Debtor’s equity during an approved bidding procedures and auction process and which included debtor in possession financing, invalidated Canaccord’s right to a success fee.  A dispute thus arose over the Canaccord retention agreement’s meaning of a “sale transaction.” Read More ›

UPDATE – Scarborough-St. James Corp. Case Dismissed For Cause, Substantive Rulings Survive Dismissal

In re Scarborough-St. James Corp., No. 15-10625 (LSS), 2015 WL 5672628 (Bankr. D. Del. Sept. 24, 2015)

With the Landlord* receiving Bankruptcy Court approval to continue its previously stayed litigation against the Debtor in Michigan state court, the Debtor moved to dismiss its bankruptcy case for cause under Bankruptcy Code § 1112(b)(1), alleging no remaining purpose existed by having the Debtor remain in bankruptcy.  The Court granted dismissal, finding that this two-party dispute is properly litigated in state court and it is unlikely that the Debtor will be able to rehabilitate under the Bankruptcy Code.  Op. at 3. Read More ›