In August, the Chapter 7 Trustee in the National Wholesale Liquidators ("NWL") bankruptcy filing approximately 90 preference actions. Just recently, the Trustee filed over 100 more preference actions in NWL. In November of 2008, I wrote about the commencement of NWL bankruptcy (read my prior post concerning the NWL bankruptcy here).

Bankruptcy lawyers who are regularly involved in distressed m&a deals have been wondering for the past few months about the potential fallout from Philadelphia Newspapers.

The U.S. Court of Appeals for the Second Circuit affirmed the U.S. Bankruptcy Court for the Southern District of New York’s dismissal of a complaint brought by Rosenman Family, LLC, an investor with Bernard L. Madoff Investment Securities LLC (BLMIS), against the trustee of BLMIS’s estate. The complaint alleged that Rosenman was entitled to a return of $10 million it wired to BLMIS, because, Rosenman argued, the funds were stolen or embezzled by BLMIS and thus never became BLMIS’s property and/or part of BLMIS’s bankruptcy estate.

The Slippery Slope to Fraud

In this detailed and insightful report, the Center for Audit Quality details how financial-accounting fraud can sometimes creep up on a company that would never have expected to become so embroiled in it.

Big, Broad Bankruptcy Bill

On September 15, 2010, the House Subcommittee on Commercial and Administrative Law voted 8-4 to report H.R. 4677 to the full House Judiciary Committee. Called the “Protecting Employees and Retirees in Business Bankruptcies Act of 2010,” H.R. 4677 contains several substantial changes to federal law aimed at preserving workers’ wages and benefits during a Chapter 11 bankruptcy proceeding. The subcommittee members voted along party lines, indicating that the bill will have a difficult fight in the full committee – its fate may ultimately depend on the result of the recent election.

Recently, over 180 adversary actions were filed in the MPC Computers bankruptcy. The adversary actions fall generally in to two categories - preference actions filed by MPC's Committee of Unsecured Creditors and breach of contract actions filed by MPC. This post will look briefly at why MPC filed for bankruptcy and discuss what may happen next now that the adversary actions are underway.

Background on the MPC's Business and Events Leading to Bankruptcy

A New York bankruptcy judge held on October 4, 2010, that second lien lenders could object to a debtor’s bid procedures approved by the first lien lenders despite the terms of an intercreditor agreement inIn re Boston Generating, LLC, No. 10-14419 (SCC) (Bankr. S.D.N.Y. Oct. 4, 2010).1 The intercreditor agreement provided the first lien lenders with the “exclusive right to…make determinations regarding the…sale” of the collateral. According to the court, however, the agreement did not expressly preclude the second lien lenders from objecting to bid procedures.

In addition to the cases discussed in "Considerations in Terminating an Insolvent Franchisee" in the June 24, 2010, Franchise Alert (available at www.wileyrein.com/insolvent_franchisee), two recently reported decisions have looked at franchisor attempts to gain relief from bankruptcy stays in order to enforce post-termination provisions.

The United States Bankruptcy Court for the District of Delaware (the "Delaware Bankruptcy Court"), recently in In re Leslie Controls, Inc., Bankr. D. Del., Case No. 10-12199, expounded on whether attorney-client and attorney work-product privileged documents remained protected from discovery under the common interest doctrine. The common interest doctrine permits counsel representing different clients with similar legal interests to share information without having to disclose that information to others.

Ambac Financial Group Inc., parent of the troubled bond insurer Ambac Assurance Corp., said Monday that it is pursuing the restructuring of its debt with a group of debt holders through a pre-packaged bankruptcy filing. The Company added that if it is unable to reach a debt restructuring agreement, it will file for bankruptcy by the end of this year. The Company's statement can be read by clicking here.