Delaware Supreme Court holds creditors of insolvent LLCs do not have derivative standing

CML V, LLC v. Bax, et al., 2011 Del. LEXIS 480 (Del. Sept. 2, 2011)

CASE SNAPSHOT

Affirming the decision of the Court of Chancery for the State of Delaware, the Delaware Supreme Court held that, unlike corporate creditors, creditors of a Delaware Limited Liability Company do not have standing to sue the LLC’s officers derivatively on behalf of an insolvent LLC.  

FACTUAL BACKGROUND

Filed under:
USA, Delaware, Insolvency & Restructuring, Litigation, Reed Smith LLP, Limited liability company, Standing (law), Balance sheet, Internal control, Derivative suit, Court of Chancery, Delaware Supreme Court, Court of equity
Authors:
Kathleen A. Murphy
Location:
USA
Firm:
Reed Smith LLP
Court finds indirect upstream owner exercised de facto control, warrants liability for WARN Act notice violation

D’Amico, et al. v. Tweeter Opco, LLC and Schultze Asset Management, LLC (In re Tweeter Opco, LLC), 453 B.R. 534 (Bankr. D. Del. 2011)

CASE SNAPSHOT

Filed under:
USA, Delaware, Employment & Labor, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Worker Adjustment and Retraining Notification Act 1988 (USA)
Authors:
Jared S. Roach
Location:
USA
Firm:
Reed Smith LLP
‘Substantive rights’ not assignable, intercreditor voting rights assignment nullified

In re SW Boston Hotel Venture, LLC, 460 B.R. 38 (Bankr. D. Mass. 2011)

CASE SNAPSHOT

Filed under:
USA, Massachusetts, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Condominium, Secured creditor
Authors:
Christopher O. Rivas
Location:
USA
Firm:
Reed Smith LLP
Successor liability – does it survive a Section 363(f) sale?

This article was first published in The Bankruptcy Strategist

Filed under:
USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor
Authors:
Luke A. Sizemore
Location:
USA
Firm:
Reed Smith LLP
Offshore bankruptcy-remote entity is not bankruptcy-proof; trust indenture voting requirement overridden in involuntary bankruptcy case

Inre Zais Investment Grade Limited VII, 455 B.R. 839 (2011)

CASE SNAPSHOT

Filed under:
USA, Insolvency & Restructuring, Litigation, Securitization & Structured Finance, Reed Smith LLP, Bankruptcy, Debtor, Security (finance), Collateralized debt obligation, Title 11 of the US Code
Authors:
Jeanne S. Lofgren
Location:
USA
Firm:
Reed Smith LLP
Free-and-clear asset sales price must exceed outstanding debt to satisfy section 363(f)(3)

In re Nance Properties, Inc., Case No. 11-06197- 8-JRL (Bankr. E.D.N.C. Nov. 8, 2011)

CASE SNAPSHOT

Filed under:
USA, North Carolina, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Debt, Secured creditor
Authors:
Joseph D. Filloy
Location:
USA
Firm:
Reed Smith LLP
Corporate synergy among related debtors key to finding conferral of economic benefit in fraudulent transfer action

Spicer v. Konjoyan (In re Renaissance Hospital, et al.), Adv. No. 10-04190-DML (Bankr. N.D. Texas, Nov. 1, 2011)

CASE SNAPSHOT

Filed under:
USA, Texas, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor, Fraud
Authors:
Joseph D. Filloy
Location:
USA
Firm:
Reed Smith LLP
Actual conflict of interest required to disqualify legal counsel under Section 327

In re The Colonial BancGroup, Inc., 2011 WL 2792477 (Bankr. M.D. Ala. July 15, 2011)

CASE SNAPSHOT

Filed under:
USA, Employment & Labor, Insolvency & Restructuring, Litigation, Reed Smith LLP, Conflict of interest, Bankruptcy, Debtor, Interest
Authors:
Jared S. Roach
Location:
USA
Firm:
Reed Smith LLP
Cross-affiliate netting provision in ISDA swap agreement is not enforceable against the debtor

In re Lehman Brothers Inc., Bankr. Case No. 08-01420 (JMP) (SIPA), 2011 WL 4553015 (Bankr. S.D.N.Y. Oct. 4, 2011)  

CASE SNAPSHOT

Filed under:
USA, Derivatives, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor, Debt, UBS, International Swaps and Derivatives Association, Lehman Brothers, Title 11 of the US Code, United States bankruptcy court
Authors:
Brian M. Schenker
Location:
USA
Firm:
Reed Smith LLP
Court recharacterizes claim, declines to adopt a per se rule that recharacterization only applies to insiders

Grossman v. Lothian Oil Incorporated, 650 F.3d 539 (5th Cir., 2011)  

CASE SNAPSHOT

In a case of first impression in the Fifth Circuit, the court recharacterized a claim of a non-insider, declining to create a per se rule that recharacterization could only apply to insiders.

FACTUAL BACKGROUND

Filed under:
USA, Banking, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debt, United States bankruptcy court, Fifth Circuit
Authors:
Ann E. Pille
Location:
USA
Firm:
Reed Smith LLP