Rejection of a contract in bankruptcy may not always accomplish a debtor’s goal to shed ongoing contractual obligations and liabilities, especially when dealing with employee benefit plans. On October 13, 2011, the Fifth Circuit Court of Appeals highlighted this issue in its opinion in Evans v. Sterling Chemicals, Inc.1 regarding the treatment of a pre-bankruptcy asset purchase agreement which contained a provision addressing the debtor-acquiror’s post-closing ERISA retiree benefit plan obligations to its new employees resulting from the transaction.
The rapid collapse of MF Global into bankruptcy amid claims that millions of dollars in customer funds is a key focus for the SEC and CFTC as well as SIPIC this week. Speculation over the outcome of the hearings before Judge Rakoff on the SEC’s settlement with Citigroup is also a key topic in securities litigation this week.
On October 18th, Bloomberg reported on H.R. 2433, the Chapter 11 Bankruptcy Venue Reform Act of 2011. The bill would restrict corporate bankruptcy filings to the state in which a firm has its principal place of business or holds most of its assets. Forum Shopping.
A recent New York bankruptcy case holds that shareholders, directors and officers who dissolve a corporation to avoid paying a judgment against the business may be jointly and severally liable for a non-dischargeable debt in their personal bankruptcies.
Introduction
Charles McSwain, a 53% member of Hawks Prairie Casino, LLC, a Washington LLC, filed a voluntary Chapter 11 bankruptcy petition in 2007. Hawks Prairie operates a gambling casino in Thurston County, Washington.
As expected a number of objections to the Chapter 9 bankruptcy petition filed by the Harrisburg city council were filed on Friday October 28, the deadline set by the Bankruptcy Court for such objections. As expected both the Commonwealth of Pennsylvania and the Harrisburg Mayor’s Office filed objections.
In recent months, U.S. bankruptcy filings – such as Omega Navigation (filed July 8 in Houston) and Marco Polo Seatrade (filed July 29 in New York) – have caught the attention of the worldwide shipping community. It is no surprise that some shipping companies have sought bankruptcy protection resulting from financial distress. Rather, the cause for surprise is that non-U.S. shipping companies have sought protection in U.S. bankruptcy courts. High-profile secured creditors in these cases have contested the exercise of the jurisdiction of U.S.
Last month, District Court Judge Shira A. Scheindlin of the Southern District of New York affirmed a bankruptcy court ruling which held that the environmental cleanup obligations of debtor Mark IV Industries, Inc. were not discharged in bankruptcy.2 Given the current legal landscape, Mark IV may make the likelihood of discharging environmental claims even more difficult, potentially undermining chapter 11 as an optimal alternative for companies saddled with environmental liabilities.
- On October 12, 2011, the Bankruptcy Court for the Southern District of New York brought TerreStar Network’s Chapter 11 bankruptcy proceeding one step closer to conclusion by approving the debtor’s $98 million settlement with two separate creditor groups over a certain purchase money credit agreement.