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Showing 27 posts recarding Judge Christopher S. Sontchi.

Delaware Bankruptcy Court Tackles Challenges to Email Privacy

In re Irish Bank Resolution Corp. (In Special Liquidation), 559 B.R. 627 (Bankr. D. Del. 2016)

Late last year, the foreign representatives (the “Foreign Representatives”) of chapter 15 debtor Irish Bank Resolution Corporation Limited (“IBRC”) were forced to get creative after their more traditional efforts to obtain discovery from a Yahoo! email account failed.  In connection with IBRC’s liquidation, significant international litigation is on-going related to the repayment evasion of billions in loans advanced by IBRC to companies owned or controlled by the Quinn Family.  In the course of that litigation, the Foreign Representatives discovered various email accounts believed to be connected to the Quinn Family and their attempts to conceal assets, including a Yahoo! email account maintained by a mysterious “Abdulla Rasimov” (the “Rasimov Account”).  The whereabouts of Mr. Rasimov are unknown, service of process has gone unacknowledged, and the Rasimov Account was closed during the proceedings described herein.  Accordingly, when their attempts to obtain the contents of the Rasimov Account through a Bankruptcy Rule 2004 order and an order to compel failed, the Foreign Representatives obtained from the Delaware Bankruptcy Court an order making them the “subscriber” of the account (the “Subscriber Order”).  With the Subscriber Order in hand, the Foreign Representatives then sought turnover of the account’s contents under sections 542(a) and 542(e) of the Bankruptcy Code from Yahoo! Inc. (“Yahoo”).  A maneuver Yahoo opposed. 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 ›

Insider’s Scoop: Judge Sontchi’s Decision to Confirm Horsehead’s Plan Was One of His Honor’s Most Difficult and Closest Calls in Ten Years on the Bench

In re Horsehead Holding Corp., No. 16-10287 (CSS) (Bankr. D. Del. Sept. 2, 2016) [Transcript Ruling]

Following a three day confirmation trial, which attracted scores of shareholders and running commentary via live tweets from the courtroom, Judge Sontchi confirmed the second amended plan of reorganization (the “Plan”) proposed by Horsehead Holding Corp. and its affiliated debtors (“Horsehead”) over the objection of the official committee of equity holders (the “Equity Committee”), holding that the Plan was proposed in good faith and satisfied the absolute priority rule.  His Honor described the decision as one of the most difficult and closest calls that he has had to make during his time on the bench. 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 ›

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 ›

Insider’s Scoop: Bankruptcy Court Grants Motions to Form an Official Equity Committee Due to Dramatic Adjustments to Valuation Over a Short Period of Time

In re Horsehead Corp., No. 16-10287 (Bankr. D. Del. May 2, 2016) (CSS) [Transcript Ruling]

In a packed courtroom, full of shareholders appearing pro se, Judge Sontchi granted motions to appoint an official equity committee.  Acknowledging that he was going “out on a limb here from the standpoint on where the law puts me”, Judge Sontchi cautioned that “something doesn’t smell right to the Court.”  Hr’g Tr. 100:17-19, 100:25-101:1.  The Court based its ruling on His Honor’s experience and the “unusual circumstances” attendant to the Debtor’s valuation, which had decreased drastically since shortly before the filing of the bankruptcy case.  Horsehead Corporation and four affiliates (the “Debtors”) filed bankruptcy petitions on February 2, 2016. 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 ›

On the Eve of the EFH Confirmation Hearing, Bankruptcy Court Issues Opinion on Unsecured Noteholders’ Entitlement to Post-Petition Interest

In re Energy Future Holdings Corp., No. 14-10979, --- B.R. ----, 2015 WL 6660787 (Bankr. D. Del. Oct. 30, 2015)

On the eve of the multi-week confirmation hearing scheduled in the chapter 11 cases of Energy Future Holdings Corp., Judge Sontchi of Delaware’s Bankruptcy Court issued several significant decisions, one of which—analyzed here—rules on whether unsecured creditors are entitled to receive post-petition interest on their claims under four sections of the Bankruptcy Code—section 502(b)(2), section 1129(a)(7) (“Best Interests Test”), section 1129(b) (“Cramdown”), and section 1124(1) (“Unimpairment”).*  First, as a threshold matter, the Court held that an allowable portion of an unsecured claim cannot include post-petition interest under the plain language of section 502(b)(2).  Second, the Court analyzed whether payment of post-petition interest on an allowed unsecured claim is required for a chapter 11 debtor to confirm a plan of reorganization and, if so, at what rate.  In sum, the Court held that:  (1) to satisfy the Best Interests Test, an unsecured creditor must receive post-petition interest at the Federal judgment rate only if it would be entitled to such a distribution in a hypothetical chapter 7 liquidation; (2) to properly Cramdown an unsecured rejecting class, the plain language of section 1129(b)(2) does not require the payment of post-petition interest but a court may award such payment if equitable, at either the contract rate or such other appropriate rate; and finally (3) Unimpairment may occur without the payment in cash of post-petition interest at the contract rate but such determination must be made by a court on the facts of the case and pursuant to the court’s equitable power. Read More ›

Preference Defendant Establishes Ordinary Course Of Business Defense Despite Ruling To The Contrary On Summary Judgment

Burtch v. Revchem Composites, Inc. (In re Sierra Concrete Design, Inc.), Adv. No. 10-52667 (CSS), 2015 WL 4381571 (Bankr. D. Del. July 16, 2015)

After a trial on the merits, the Bankruptcy Court issued an Opinion and entered judgment for defendant Revchem Composites, Inc. (“Revchem”), finding that Revchem established that all of the transactions in question were made in the ordinary course of business, thereby protected from avoidance as a preference.   Read More ›

UPDATE – After Trial And Despite Likelihood Of Success On The Merits, Bankruptcy Court Holds No “Cause” To Lift Automatic Stay, Ending Make-Whole Adversary Proceeding in EFH

Delaware Trust Co. v. Energy Future Intermediate Holding Co. (In re Energy Future Holdings Corp.), Adv. Pro. No. 14-50363 (CSS), --- B.R. ---- (Bankr. D. Del. July 8, 2015)

Previously, the Delaware Bankruptcy Court determined that an evidentiary hearing was necessary on the issue of whether “cause” exists to lift the automatic stay with respect to the make-whole dispute.  For a general background of the facts and law, see our recent blog post here.  Now, after a three-day trial, Judge Sontchi has held that, under the totality of the circumstances, cause does not exist to lift the automatic stay to allow the Trustee* to waive the default, decelerate the Notes, and collect the Applicable Premium (the make-whole payment). Read More ›