On July 9, 2012, Judge Mary F. Walrath of the Bankruptcy Court for the District of Delaware disallowed a claim for rejection damages related to a real estate development agreement, because the claim had been released upon the termination of an LLC Agreement, and the underlying ground lease never came into existence.  In re Magna Entm’t Corp., 2012 Bankr. LEXIS 3089 (Bankr. D. Del. July 9, 2012).  

Background

On August 2, 2012, the Court of Appeals for the 5th Circuit issued a decision in Lightfoot v. MXEnergy Electric, Inc. (In re MBS Management Servs., Inc.). No. 11-30553, (5th Cir. Aug. 2, 2012).

As NASA engineers breathe a sigh of relief after the “seven minutes of terror” that was the rover Curiosity’s landing on Mars, recipients of payments under commodity forward contracts can—at least in the Fifth Circuit—rest assured that agreements that meet the basic definition of forward contract contained in section 101(25) of the Bankruptcy Code will be protected from preference liability should their counterparties find themselves in bankruptcy. Last Thursday, in Lightfoot v. MXEnegry Electric, Inc. (In re MBS Management Servs., Inc.). No. 11-30553 (5th Cir. Aug.

On June 29, 2012, Judge Thomas B. Bennett of the Bankruptcy Court for the Northern District of Alabama held that operating expenses as determined under Jefferson County’s sewer warrants indenture do not include (i) a reservation for depreciation, amortization or future expenditures or (ii) an estimate for professional fees and expenses and that the monies remaining in the sewer system’s revenue account after the payment of actual operating expense should be paid to the warrant holders in accordance with the Indenture.

We recently commented here on the standard for reviewing key employee incentive plans (KEIPs) and the approval of the KEIP in the Velo Holdings chapter 11 cases pending in the Southern District of New York.  On July 24, Bankruptcy Judge Carla Craig of the Eastern District of New York approved a KERP (a key employee retention plan) in the Global Aviation bankruptcy cases aimed at retaining five employees deemed critical to the conso

On June 6, 2012, Bankruptcy Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved a $2.875 million key employee incentive plan (“KEIP”) in the Velo Holdings bankruptcy cases over the objection of the U.S. Trustee finding that it was primarily incentivizing and a sound exercise of the debtors’ business judgment.  Inre Velo Holdings Inc., Case No. 12-11384 (MG), 2012 Bankr. LEXIS 2535 (Bankr. S.D.N.Y. 2012).  The decision follows well-settled law in the Southern District and Delaware regarding approval of KEIPs.

On May 1, 2012, the United States Court of Appeals for the Third Circuit in In re Federal–Mogul Global, Inc. confirmed that anti-assignment provisions in a debtor’s insurance liability policies are preempted by the Bankruptcy Code to the extent they prohibit the transfer of a debtor’s rights under such policies to a personal-injury trust pursuant to a chapter 11 plan.In re Federal-Mogul Global Inc., --- F.3d ---, 2012 WL 1511773 (3d Cir. 2012).

On June 28, 2012, Judge Allan Gropper of the United States Bankruptcy Court for the Southern District of New York declined to appoint an official committee of equity holders in Kodak’s chapter 11 cases.  The bankruptcy court determined that the appointment of an official committee was not warranted at that time, given that the costs to the bankruptcy estates would be substantial and equity’s interests were already represented by other constituencies seeking to maximize value and by a sophisticatedad hoc group of shareholders.  In re Eastman Kodak Company, Case No

On June 22, 2012, Judge Robert E. Gerber of the United States Bankruptcy Court for the Southern District of New York granted the U.S. Trustee’s motion to transfer the chapter 11 cases of Houghton Mifflin Harcourt Publishing Company and its affiliates to a different venue, notwithstanding the fact that the debtor’s prepackaged plan had been confirmed with unanimous support from its creditors, the cases were projected to conclude within 30 days of filing, and the debtors’ primary creditor constituencies supported venue in New York.

On May 29, 2012, the U.S. Supreme Court  in RadLAX Gateway Hotel v. Amalgamated Bank, its first significant Chapter 11 opinion in several years, affirmed the  U.S. Court of Appeals for the Seventh Circuit’s decision in River Road Hotel Partners v.  Amalgamated Bank, prohibiting a debtor from  selling assets free and clear of liens under a plan of reorganization without permitting a secured creditor to credit bid.  RadLAX resolves a circuit split and reverses prior rulings of the U.S.