In In re Falcon Products, Inc., 381 B.R. 543 (8th Cir. BAP, 2008), the bankruptcy appellate panel (BAP) for the Eighth Circuit reversed a decision by the bankruptcy court for the District of Missouri, and held that when applying the hypothetical liquidation test to determine whether a secured creditor received potentially preferential payments, the collateral must be valued as of the petition date and not as of the payment transfer date.
In a recent decision of the United States Bankruptcy Court for the District of Delaware, Jeld-Wen, Inc. v. Van Brunt, Adv. Proc. No. 07-51602 (Bankr. D. Del.
In a recent decision of the United States Bankruptcy Court for the District of Delaware, In re Federal Mogul Global, Inc., No. 01-10578 (JKF) (Bankr. D. Del., Mar. 19, 2008) (click here to read the decision), the court ruled that the assignment of rights in certain insurance policies to an asbestos trust was valid and enforceable under the Bankruptcy Code, and anti-assignment provisions in the policies and applicable state law were preempted.
According to press reports, Tammy Andreycak, a former director of accounting at Le-Nature’s Inc., recently pleaded guilty to multiple fraud charges in the United States District Court for the Western District of Pennsylvania. The charges included bank fraud, wire fraud, conspiracy and filing false income-tax returns, all allegedly taking place between 2003 and 2006. Andreycak is the first person to be prosecuted in the fraudulent scheme alleged to have occurred at Le-Nature’s.
A Pennsylvania state court has reportedly ruled, in an unpublished opinion, that the Pennsylvania Insurance Commissioner may pursue a theory of damages against the accountant of an insolvent insurer based on a legal claim of “deepening insolvency.” SeeArio v. Deloitte & Touche, PICS No. 08-1013 (Pa. Commw. Ct.).
Resolving a split among various circuits, the United States Supreme Court has ruled that the exemption from state stamp taxes under section 1146(a) of the Bankruptcy Code does not apply to asset sales under section 363 of the Bankruptcy Code that took place before confirmation of a debtor’s chapter 11 plan—an event that may take months or years to accomplish.1
In a recent decision,1 Judge Sweet of the United States District Court for the Southern District of New York affirmed a bankruptcy court decision and refused to recognize under chapter 15 of the Bankruptcy Code either as “foreign main proceedings” or as “foreign nonmain proceedings” the well-publicized liquidations brought in the Grand Court of the Cayman Islands by two Bear Stearns hedge funds (the “Funds”).
If you thought, like many, that the Delaware Supreme Court’s decision in Trenwick Am. Litig. Trust v. Billet, 2007 Del. LEXIS 357 (Del. 2007), put the theory of “deepening insolvency” to rest, once and for all, well, think again. A recent decision, George L. Miller v. McCown De Leeuw & Co. (In re The Brown Schools), 2008 Bankr. LEXIS 1226 (Bankr. D. Del. April 24, 2008), from the United States Bankruptcy Court for the District of Delaware shows that “deepening insolvency” endures, albeit in reduced form.
In May of 2006, the U.S. Bankruptcy Court in Chicago, Illinois, issued an 89-page opinion finding that a common stock valuation performed by KPMG (n/k/a BearingPoint) was reasonable and appropriate. The valuation had been performed in September 2000 of high-tech start-up Nanovation Technologies, Inc. After Nanovation filed for bankruptcy in 2001, the bankruptcy trustee sued BearingPoint, alleging that the valuation had been negligently performed and had grossly overvalued the stock.
On April 9, 2008, the US Bankruptcy Court for the District of Delaware issued its opinion in Miller v. McDonald, et al., 2008 WL 1002035 (Bkrtcy.D.Del.), in which it held that the general counsel of a public company had a duty to implement a system that would provide reasonable monitoring to prevent corporate wrongdoing. The court found that the general counsel’s duty arose from two sources. First, Delaware law imposes a duty on directors and senior officers to implement a system that would provide reasonable monitoring of corporate activity.