Regional landline network operator Fairpoint Communications is finally poised to emerge from Chapter 11 bankruptcy as a result of the decision of the Vermont Public Safety Board (VPSB) to approve the company’s amended reorganization plan. Vermont had been the lone holdout among Maine, New Hampshire and 15 other states that had previously endorsed the plan. The reorganization was precipitated largely by the financial burden of FairPoint’s $2.3 billion purchase of New England landlines from Verizon Communications in 2008.

Introduction

In CML V, LLC v Bax, the Court of Chancery held that a creditor of JetDirect Aviation Holdings, LLC, a Delaware limited liability company ("JetDirect"), did not have derivative standing to assert breach of fiduciary duty claims against the board of managers of the insolvent JetDirect. The creditors would have had standing if JetDirect were a Delaware corporation, but the Court found that the Delaware LLC Act does not allow an LLC’s creditors to bring derivative claims when a Delaware LLC is insolvent (or at any other time).

Straining under a debt burden in excess of $1 billion, TerreStar Networks filed a petition for Chapter 11 protection with a New York bankruptcy court on Tuesday. Known formerly as Motient Corp., TerreStar is in the midst of deploying a hybrid terrestrial/mobile satellite network that would serve rural and other hard-to-reach areas in the U.S.

David Vladeck, Director of the FTC’s Bureau of Consumer Protection, recently sent a letter to creditors of XY Magazine, warning that the creditors’ acquisition of personal information about the debtor’s subscribers and readers in contravention of the debtor’s privacy promises could violate the Federal Trade Commission Act (“FTC Act”).

In a recent decision, SEC v Byers,1 the Second Circuit Court of Appeals held that district courts possess the authority and discretion to bar the filing of involuntary bankruptcy petitions without the district court’s permission.

On Monday, the Vermont Public Safety Board (VPSB) threw up a roadblock against Fairpoint Communications’ quest to emerge from bankruptcy with the issuance of a 96- page order that rejects the company’s plan of reorganization. Saddled with debt accruing from its $2.3 billion purchase of landline phone assets from Verizon Communications in 2008, Fairpoint—a regional provider of landline telephone services in the states of Vermont, New Hampshire and Maine—filed for Chapter 11 bankruptcy protection in October of 2009.

A Mississippi Bankruptcy Court recently addressed several employer defenses to liability under the Worker Adjustment and Retraining Notification Act (“WARN Act”), which is noteworthy in the context of the current economy. In re FF Acquisition Corp. d/b/a Flexible Flyer, 423 B.R. 502 (Bankr. N.D. Miss. January 20, 2010).

Chapter 15 of the Bankruptcy Code permits a foreign representative of a foreign insolvency proceeding to seek a bankruptcy court’s assistance in an ancillary proceeding upon recognition of the foreign proceeding. Upon recognition, Chapter 15 empowers a bankruptcy court to grant broad relief to a foreign representative to protect the assets of the debtor or the interests of its creditors in the United States.

Credit bidding of debt held by a secured creditor at a sale of collateral under section 363 of the Bankruptcy Code has become commonplace.1 Does a secured creditor have that same ability in a sale under a chapter 11 plan? Most thought so, but according to the Third Circuit Court of Appeals, not always.