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Showing 8 posts in 363 Sales.

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 ›

Third Circuit Allows 363 Purchaser’s Funds to Bypass IRS and Satisfy Certain Administrative and General Unsecured Claims

In re ICL Holding Company, Inc., No. 14-2709, 2015 WL 5315604 (3d Cir. Sept. 14, 2015), aff’g sub nom United States v. LCI Holding Co., Inc., Nos. 13-924 (SLR), 13-1188 (SLR), 2014 WL 975145 (D. Del. March 10, 2014)

As discussed by the Delaware Bankruptcy Insider in March of last year, in ruling on a motion for stay the Delaware District Court determined that the Delaware Bankruptcy Court did not err when it approved a sale of substantially all of the assets of LCI Holding Company, Inc. and its affiliated debtors (the “Debtors”) and a settlement between the purchaser (the Debtors’ prepetition senior lender), the official committee of unsecured creditors, and the Debtors that (a) provided for the creation of an escrow from non-estate purchaser funds to, among other things, satisfy certain fees and expenses of professionals and certain expenses expected to be incurred by the Debtors in connection with their wind down and provide a distribution to allowed general unsecured claims and noteholder claims and (b) excluded the Internal Revenue Service (the “IRS”) from those creditors entitled to share in the escrowed funds.  The IRS, which asserted an administrative claim for tax liability resulting from the sale, appealed the approval of the sale and settlement to the Third Circuit Court of Appeals asserting that the sale and settlement violated the absolute priority rule by favoring creditors with an equal or lesser priority under the Bankruptcy Code’s distribution scheme.    Read More ›

Underwater Lender Could Not Be Compelled To Accept Money Satisfaction Of Its Property Interests; Sale Free And Clear Under 363(f) Denied

In re Ferris Props., Inc., No. 14-10491 (MFW), 2015 WL 4600248 (Bankr. D. Del. July 30, 2015)

On July 30, 2015, the Delaware Bankruptcy Court denied a debtors’ request to sell properties free and clear of liens and encumbrances pursuant to section 363(f) of the Bankruptcy Code, holding that the mortgagee, whose claim would not be paid in full from the sale proceeds, could not be compelled to accept a money satisfaction of its interests in the properties and did not consent to the sale.  A debtor may sell property free and clear of any interest in such property only if, among other things, the entity holding the interest consents or the “entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest.”  11 U.S.C. § 363(f)(2) & (5). In Ferris, the mortgagee did not consent to the sale.  Despite the proposed buyer’s argument that the mortgagee could still be compelled under section 1129(b)(2)(A) to accept a money satisfaction of its liens, the Court disagreed.  Section 1129(b)(2)(A) governs the “cram down” of secured claims in the plan confirmation context.  Judge Walrath questioned whether such provision provides for a qualifying “legal proceeding” under section 363(f)(5), noting that the courts are in disagreement over this issue.  Moreover, and more importantly, neither the debtors nor the proposed purchaser demonstrated that a section 1129(b)(2)(A) cram down could even be effectuated with respect to the mortgagee’s secured claim.  There was no showing that the mortgagee would retain its liens, receive deferred cash payments totaling at least the allowed amount of its claim, or would receive the indubitable equivalent of its claim – the three possible avenues of cram down under section 1129(b)(2)(A).  Accordingly, both the argument and the sale failed. Read More ›

The Insider’s Scoop: EFH Bidding Procedures Approved But Significant Modifications Necessary To Cure Fundamental Flaws

In re Energy Future Holdings Corp., No. 14-10979 (CSS) (Bankr. D. Del. Nov. 3, 2014) [Transcript Ruling]

Upon commencement of this mega-chapter 11 case, the Debtors filed and pursued assumption of a restructuring support agreement (“RSA”), which contemplated, among other things, the tax-free spinoff of the Debtor entities that control the economic interest in their non-debtor affiliate, Oncor, a company that provides residential and commercial electricity in Texas and has been estimated by the Debtors to be worth as much as $18 billion.  Over the summer, however, the Debtors were forced to abandon the RSA when certain bidders offered more value than was to be provided under the RSA transactions.  Read More ›

Bankruptcy Court Allows Sale Free and Clear of Successor Liability Claims

In re Ormet Corp., No. 13-10334 (MFW), 2014 WL 3542133 (Bankr. D. Del. July 17, 2014)

In this Memorandum Opinion, Judge Walrath overruled an objection to a sale of the debtors’ assets free and clear of the objector’s successor liability claim, and granted a stay waiver under Bankruptcy Rules 6004(h) and 6006(d) to allow the sale to close immediately.  In reaching its conclusion, the Court emphasized the integral nature of Bankruptcy Code section 363(f) to the bankruptcy process, enabling debtors to sell assets free and clear of any claims—something not available outside of the bankruptcy context. Read More ›

Purchaser Cannot Escape Tax Lien Under Terms of Sale Order Despite Court’s Narrow Interpretation of “Permitted Encumbrances”

In re Joan Fabrics Corporation, No. 07-10479 (CSS) (Bankr. D. Del. May 5, 2014)

On May 5, 2014, the Honorable Christopher S. Sontchi issued an Opinion denying a purchaser’s motion to enforce a sale order and hold a North Carolina county in contempt for pursuing unpaid taxes.  In doing so, the Court considered specific circumstances of the sale and interpreted the terms of the asset purchase agreement under North Carolina law to conclude that the county’s actions did not violate the sale order. Read More ›

Debtors’ Funds Purchased in Section 363 Sale Permitted to be Disbursed to Debtors' Administrative and Unsecured Creditors Over IRS Objections

United States v. LCI Holding Co., Inc., Nos. 13-924 (SLR), 13-1188 (SLR), 2014 WL 975145 (D. Del. March 10, 2014)

On March 10, 2014, Judge Sue L. Robinson of the District Court denied the request of the United States, on behalf of the Internal Revenue Service, to stay disbursement of funds placed into escrow by a purchaser of debtor-assets intended to satisfy some but not all administrative and unsecured claims asserted against the debtors.   Simply put, the sale was appropriate under section 363 of the Bankruptcy Code and the escrowed funds were not property of the debtors' estates. Read More ›

Credit Bidding Limited For Cause Under Section 363(k)

In re Fisker Automotive Holdings, Inc., et al., No. 13-13087 (KG), 2014 WL 210593 (Bankr. D. Del. Jan. 17, 2014)

In this Memorandum Opinion, the Honorable Kevin Gross limited for cause secured creditor Hybrid Tech Holdings, LLC's entitlement to credit bid its secured claims in an upcoming sale of Fisker Automotive Holdings, Inc.'s assets pursuant to section 363(k) of the Bankruptcy Code. Read More ›