Bankruptcy Case Summaries

In the decision of In re Metroplex on the Atlantic, LLC, 545 B.R. 786 (Bankr. E.D.N.Y. 2016), the United States Bankruptcy Court for the Eastern District of New York held that an easement is an in rem property interest, subject to sale free and clear under Bankruptcy Code section 363(f).

The debtor constructed a building on property facing the Far Rockaway ocean.  Almost 100 years earlier, an easement had been granted to owners of an adjacent property, giving them a right of way to the ocean. The debtor and its secured creditor proposed a plan that provided for the property to be sold free and clear of all claims and interests, including the easement.  The owner objected, arguing that the property could not be sold free and clear of the easement.

The bankruptcy court found that the easement was an in rem property interest:  “An easement is more than a personal privilege to use another’s land, it is an actual interest in that land.”  As such, the court held it was subject to sale free and clear under section 363(f), and concluded that the easement owner could be compelled to accept a monetary satisfaction for the easement under state law.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

On August 12, 2016, petitioning creditors Beal Bank USA and CLMG Corp. filed an involuntary chapter 11 bankruptcy petition against Bennu Titan LLC (f/k/a ATP Titan LLC).  The involuntary debtor is affiliated with Bennu Oil & Gas, a deep water oil exploration firm based in Harris County, Texas.

For a link to a brief post discussing involuntary bankruptcies in general, click here.  Under Section 303 of the Bankruptcy Code, a debtor can be “forced” into an involuntary bankruptcy.  11 U.S.C.§ 303(b)(1).  If a company has 12 or more creditors, an involuntary petition requires three or more creditors whose claims are not contingent as to liability or subject to a bona fide dispute as to either liability or amount to file the petition.

The involuntary bankruptcy petition was filed in the United States Bankruptcy Court for the District of Delaware, and has been assigned to Judge Laurie Selber Silverstein, Case No. 16-11870.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

The operator of the Fox and Hound, Bailey’s Sports Grille and Champps Kitchen and Bar chains filed for Chapter 11 bankruptcy protection on Wednesday, August 10th, listing debts that significantly exceeded assets.

Last Call Guarantor LLC and at least eight affiliates (“Debtors”) filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. The filing constitutes the second bankruptcy filing for chain restaurants.

According to the Petition, the Debtors have up to 49 creditors and liabilities of up to $500 million, including more than a half million owed to a food services company based out of Illinois.   Assets were estimated of approximately $50 million.

In 2013, the operator of Fox and Hound and Champps restaurants sought bankruptcy protection. In 2014, a group of lenders led by distressed investor Cerberus Capital Management won bankruptcy-court approval to purchase the chains out of the original bankruptcy filing for more than $120 million, according to the Wall Street Journal.

The First Day Hearing was heard on August 12th.  The Debtors are represented by the law firm of Greenberg Traurig, LLP.  The case number of the lead debtor is Case No. 16-11844-KG. The bankruptcy cases are presiding before the Honorable Kevin Gross.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

On July 29, 2016, SLJ Trucking Inc. (“Debtor” or “SLJ”) filed a voluntary bankruptcy petition under Chapter 7 of the United States Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware.  The Debtor is a licensed and bonded freight shipping and trucking company running freight hauling business from Newark, Delaware.

According to the Petition, the Debtor has less than $50,000 in estimate assets, and between $100,000 and $500,000 in estimated liabilities.  The Section 341 meeting of creditors is scheduled for September 1st at 11:00 a.m. at the J. Caleb Boggs Federal Building, 844 King St., Room 2112, Wilmington, DE.

One way in which creditors can assert their interests is to attend the Section 341 Meeting of Creditors, in order to depose the debtor’s representative regarding the assets and liabilities of the bankruptcy estate.  Creditors may retain counsel to conduct such an examination of the debtor’s representative.  The Section 341 meeting of creditors is an integral component of a bankruptcy proceeding.  Creditors often want to know what information is made available, and what procedures are followed, during a typical meeting of creditors.

General topics that are discussed during a Section 341 meeting can include the following issues:

  • The nature of scope of a debtor’s assets and liabilities;
  • The amount of accounts receivable and accounts payable;
  • To what extent the debtor is able to repay its creditors;
  • Whether insurance remains active;
  • The condition and location of goods received in the 20 days before bankruptcy;
  • The condition and location of goods received in the 45 days before bankruptcy;
  • The debtor’s or trustee’s plan to reorganize its debt or liquidate its assets;
  • The debtor’s plan after it emerges from bankruptcy (not applicable to a Chapter 7 debtor);
  • Whether the debtor experienced any changes in revenue since filing for bankruptcy; and
  • Potential avoidance actions to be commenced by the debtor or trustee.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.