On July 9, 2012, Judge Peter J. Walsh of the United States Bankruptcy Court for the District of Delaware issued a memorandum opinion (the “Opinion“), in the Blitz U.S.A. bankruptcy proceeding addressing whether an employee bonus plan is a transaction made in the ordinary course of business under 11 U.S.C. 363(c)(1). The court
Recent Developments in Bankruptcy Law
Decision in Six Flags Bankruptcy Addresses Sufficiency of Pleadings Under Fed.R.Civ.P. 12(b)(6)
Recently, the Delaware Bankruptcy Court in the Six Flags bankruptcy issued a decision addressing whether an adversary complaint alleged facts sufficient to overcome a motion to dismiss. The Court’s decision provides analysis of recent decisions by the Supreme Court and the Third Circuit regarding standards for pleading. More specifically, the Six Flags decision looks…
The Common Interest Privilege
Below is a post from Michael Temin, senior counsel with Fox Rothschild. Michael’s post looks at a recent decision by Judge Sontchi in the Leslie Controls bankruptcy.
A discovery dispute gave the bankruptcy court an opportunity to rule on the common interest privilege which, the court said, has completely replaced the joint defense privilege for information sharing among clients with different attorneys, citing In re Teleglobe Communications Corp., 493 F.3d 345, 364 n. 20 (3d Cir. 2007). Leslie Controls, Inc., Case No. 10-12199 (Bankr. D. Del. 9/21/10)(Sontchi, B.J.).
The question presented was whether privileged communications between the debtor and its counsel which were shared pre-petition with the ad hoc committee of asbestos plaintiffs and the proposed future claimants’ representative remained protected from discovery.
Decision in Qimonda Bankruptcy Looks at Whether a Conversion Claim is Entitled to Administrative Priority
On August 3, 2010, Judge Mary F. Walrath of the United States Bankruptcy Court for the District of Delaware issued an opinion in the Qimonda bankruptcy addressing whether Google was entitled to an administrative claim against the Qimonda bankruptcy estate. This post will look briefly at the facts underlying Google’s claim, the holding of…
Decision in Spansion Finds That Debtors Did Not Demonstrate Sound Business Judgment in Settlement of Patent Litigation
On June 2, 2009, Judge Kevin J. Carey, Chief Judge of the United States Bankruptcy Court for the District of Delaware, issued an opinion in the Spansion bankruptcy finding that the Debtors’ settlement of various patent cases was not the result of the "sound exercise of the Debtors’ business judgment." Judge Carey’s decision in Spansion is helpful as it provides analysis of what is required in order for a debtor to meet its burden when seeking bankruptcy court approval of a settlement.
Spansion filed for bankruptcy on March 1, 2009. Approximately two weeks after filing for bankruptcy, Spansion entered into a settlement agreement with Samsung Electronics Co. settling two patent infringement cases commenced by Spansion and settling one patent infringement case commenced by Samsung against Spansion. Pursuant to the parties’ settlement agreement, Samsung agreed to pay Spansion $70 million.…
Continue Reading Decision in Spansion Finds That Debtors Did Not Demonstrate Sound Business Judgment in Settlement of Patent Litigation
Decision in SemCrude Interprets “Mutuality” Requirement for Setoffs Under Section 553 of the Bankruptcy Code
The Bankruptcy Code allows for the setoff of “mutual debts” in a bankruptcy proceeding under 11 U.S.C. 553(a). Section 553 makes no reference to non-mutual debts, which courts interpret to mean that non-mutual debts are not subject to setoff under the Bankruptcy Code. Recently, in the SemCrude bankruptcy, the Honorable Brendan L. Shannon issued…
When Is The Stalking Horse Break-up Fee A Benefit To The Bankruptcy Estate: Another Look at Calpine v. O’Brien Environmental Energy
Today in the PPI Holdings bankruptcy, the PPI debtors presented their bid procedures motion which sought approval of the procedures by which PPI would sell substantially all of its assets. PPI’s motion also sought approval of a break-up fee for the stalking horse bidder. In support of the break-up fee, PPI cited the Third Circuit’s decision in Calpine Corp. v. O’Brien Envtl. Energy, Inc. (In re O’Brien Envtl. Energy, Inc.), 181 F.3d 527 (3d Cir. 1999).
Given the increase in bankruptcies, break-up fees will continue to be an issue for debtors and creditors alike. The purpose of this post is to take a look at the O’Brien decision and consider when a break-up fee is appropriate, and the factors courts will consider in deciding to award such fees.…
Continue Reading When Is The Stalking Horse Break-up Fee A Benefit To The Bankruptcy Estate: Another Look at Calpine v. O’Brien Environmental Energy
American Home Mortgage Sheds Light on the Meaning of “Repurchase Agreement”
Earlier this year, the United States Bankruptcy Court for the District of Delaware issued an important decision in American Home Mortgage, Inc. regarding the scope of the recently amended definition of a “repurchase agreement”. Under the Bankruptcy Abuse Prevention Consumer Protection Act of 2005, Congress broadened the Bankruptcy Code’s definition of "repurchase agreement" to include the…