Header graphic for print
Delaware Bankruptcy Litigation Information on Corporate Bankruptcy Proceedings in Delaware and Throughout the United States

Category Archives: Bankruptcy Law Basics

Subscribe to Bankruptcy Law Basics RSS Feed

Personal Injury or Wrongful Death Claims against Chapter 11 Debtors: How to Proceed

Posted in Bankruptcy Law Basics

Summary When a company files for bankruptcy, they gain a number of protections under federal law.  One of these protections is the “automatic stay” provided by 11 U.S.C. § 362. The automatic stay makes it illegal to continue prosecuting, or to initiate, an action against the debtor who is in bankruptcy.  Even if that debtor… Continue Reading

What is the Basis for an Administrative Rent Claim?

Posted in Bankruptcy Law Basics

There are generally three types of claims in a bankruptcy proceeding: unsecured claims, secured claims and administrative expense claims. Section 503 of the Bankruptcy Code governs the allowance of administrative expense claims. Section 503 provides that "after notice and a hearing, there shall be allowed administrative expenses…, including the actual and necessary costs and expenses… Continue Reading

When is an Appeal Equitably Moot?

Posted in Bankruptcy Law Basics

Introduction On May 12, 2012, the United States District Court for the District of Delaware (the “District Court”) issued an opinion (the “Decision”) in the SemCrude bankruptcy in response to the SemCrude reorganized debtors’ (“Debtors”) motion to dismiss an appeal. Several of Debtors’ oil producers (the “Producers”) appealed from orders entered by the United States… Continue Reading

Seeking Relief from the Automatic Stay in Delaware

Posted in Bankruptcy Law Basics

Introduction As more companies file for bankruptcy, creditors and other interested parties of a debtor must quickly familiarize themselves with the automatic stay.  Section 362(a)(1) of the Bankruptcy Code stays "the commencement or continuation … of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before… Continue Reading

Decision in Custom Food Products Looks at Requirements for Service By Mail

Posted in Bankruptcy Law Basics

Those not familiar with the Federal Rules of Bankruptcy Procedure are often surprised to learn that service by mail is sufficient in a bankruptcy proceeding.  Federal Rule of Bankruptcy Procedure 7004(b)(3) authorizes service on a corporation (foreign or domestic) within the United States by first class mail as follows: … by mailing a copy of the… Continue Reading

Decision in DHP Holdings Considers Forum Selection Clause in Deciding Whether to Grant Motion to Change Venue

Posted in Bankruptcy Law Basics

Introduction In September of this year, the Honorable Mary F. Walrath, the presiding Judge in the DHP Holdings bankruptcy, issued a decision addressing  the effect of a forum selection clause when deciding a motion to change venue.  This issue came before the court in an adversary action filed by DHP against The Home Depot.  After DHP filed… Continue Reading

A Closer Look at the Equitable Power of the Bankruptcy Court

Posted in Bankruptcy Law Basics

Introduction On August 20, 2010, Petroflow Energy Ltd. ("Petroflow"), filed a petition for bankruptcy in the United States Bankruptcy Court for the District of Delaware.  Months prior to Petroflow’s filing for bankruptcy, the company’s subsidiaries, North American Petroleum Corporation USA and Prize Petroleum LLC, filed petitions for bankruptcy in Delaware.  After Petroflow filed for bankruptcy in August,… Continue Reading

Decision in Eclipse Aviation Addresses Subject Matter Jurisdiction of the Bankruptcy Court

Posted in Bankruptcy Law Basics

Introduction On August 4, Judge Mary F. Walrath issued an opinion in the Eclipse Aviation bankruptcy that discusses the scope of the Court’s subject matter jurisdiction.  This issue – the subject matter jurisdiction of the bankruptcy courts - comes up less frequently in decisions than issues such as plan confirmation, relief from stay or avoidance actions (to name a few).  Often,… Continue Reading

Decision in Spansion Addresses Issues That Arise During Plan Confirmation

Posted in Bankruptcy Law Basics

Introduction On April 1, 2010, Judge Kevin J. Carey , Chief Judge of the United States Bankruptcy Court for the District of Delaware issued an opinion (the "Opinion") in the Spansion bankruptcy rejecting the Debtor’s proposed plan of reorganization.  This post will look at the requirements provided for under the Bankruptcy Code in order for… Continue Reading

What is a Fraudulent Transfer? Decision in Elrod Holdings Explains

Posted in Bankruptcy Law Basics

Introduction Section 548 of the United States Bankruptcy Code allows for the avoidance of transfers that are either intentionally or constructively fraudulent.  Section 548 provides, in relevant part, as follows: (a)(1)  The trustee may avoid any transfer … of an interest of the debtor in property, or any obligation … incurred by the debtor, that… Continue Reading

Decision in S-Tran Holdings Bankruptcy Looks at When a Letter of Credit Constitutes Property of the Estate

Posted in Bankruptcy Law Basics

Introduction Judge Kevin J. Carey, Chief Judge of the Delaware Bankruptcy Court, issued a decision recently in the S-Tran Holdings bankruptcy that addresses whether letters of credit constitute property of the bankruptcy estate.  The Court’s decision in S-Tran Holdings is worth review as letters of credit are a common part of a debtor’s pre and post-petition financing.  Recent decisions hold that… Continue Reading

A Tale of Two Bankruptcy Auctions

Posted in Bankruptcy Law Basics

Introduction In recent months, bankruptcy auctions went forward in two different bankruptcy proceedings that illustrate the extent to which auctions can vary both procedurally and substantively. One auction involved the sale of a single asset and lasted less than an hour, while the second auction involved the sale of the debtor’s entire business and lasted over the… Continue Reading

What Information is Required in a Chapter 11 Disclosure Statement?

Posted in Bankruptcy Law Basics

Introduction On June 25th, the Debtors in the SemCrude bankruptcy present their Motion Approving Debtors’ Disclosure Statement (the "Motion").  Debtors’ Motion provides a good opportunity to review the standards by which bankruptcy courts often measure the content of a debtor’s disclosure statement.  The following provides a summary of some of the frequently cited cases and… Continue Reading

A Closer Look at Chapter 11 Bankruptcy Auctions

Posted in Bankruptcy Law Basics

Introduction On May 1, 2009, Magna Entertainment ("Magna") filed a motion in the United States Bankruptcy Court for the District of Delaware whereby it sought authority to schedule an auction, receive approval of auction bid procedures and proceed with the sale of assets (the "Sale Motion").  I have previously written about bankruptcy sale motions on this blog,  however,… Continue Reading

Decision in Broadstripe Bankruptcy Looks At Standard for Preliminary Injunctive Relief

Posted in Bankruptcy Law Basics

Introduction On March 10, 2009, the Honorable Christopher S. Sontchi of the United States Bankruptcy Court for the District of Delaware issued a decision addressing the standard for preliminary injunctive relief in bankruptcy.  This post will look at the substantive and procedural issues considered by the Court in Broadstripe LLC v. National Cable Television Cooperative (In re… Continue Reading

Issues Relevant To The Fairchild Corporation Bankruptcy: What are the Standards for DIP Financing Priming Liens and Granting Relief from the Automatic Stay?

Posted in Bankruptcy Case Summaries, Bankruptcy Law Basics

Introduction The Fairchild Corporation ("Fairchild" or the "Debtor"), filed for bankruptcy in Delaware on March 18, 2009.  Fairchild’s bankruptcy proceeding is before the Honorable Christopher S. Sontchi of the United States Bankruptcy Court for the District of Delaware.  According to its press release, Fairchild operates in three markets:  aerospace, real estate and motor cycle apparel.  In… Continue Reading

Personal Jurisdiction in Bankruptcy Proceedings: Decision in Uni-Marts Bankruptcy Addresses “Minimum Contacts.”

Posted in Bankruptcy Law Basics

  Introduction Bankruptcy lawyers are sometimes asked how a business or individual can be required to defend a lawsuit in Delaware.  Typically, this issue arises when a debtor commences an adversary action, such as filing a preference complaint, and sues a defendant who has no ties to Delaware.  "How can they do this?" is a common… Continue Reading

After Foamex Files for Bankruptcy, Its Lenders Object to Critical Vendor Motion

Posted in Bankruptcy Case Summaries, Bankruptcy Law Basics

Introduction Foamex International Inc. ("Foamex" or "Debtors"), located in Media, Pennsylvania, filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on February 18, 2009.  Foamex is one of the largest manufacturers of polyurethane and polymer foam products. (Read Foamex’s Declaration in Support of First Day Motions here).  Foamex generated $980… Continue Reading