The Texas Supreme Court, on June 20, 2014, issued its highly  anticipated opinion in Ritchie v. Rupe, 2014 Tex. LEXIS 500 (Tex.  2014). Ritchie involved a claim by a minority shareholder in a  closely held corporation under the Texas receivership statute,  seeking to force the majority shareholders to buy-out the minority  shareholder’s interest in the corporation.

The U.S. Trustee in American’s Chapter 11 bankruptcy proceedings is challenging American’s $19.8 million golden parachute for its CEO Tom Horton.

Last Friday, the jury in FDIC v. Van Dellem (C.D. Cal. Case No.

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.

The Bottom Line:

The U.S. Court of Appeals for the Fifth Circuit, on Aug. 16, 2011, affirmed the lower court’s decision authorizing reimbursement of expenses to qualified bidders for a reorganization debtor’s assets. In re Asarco, LLC, 2011 BL 213002 (5th Cir. Aug. 16, 2011). In the court’s view, the debtor provided “a compelling and sound business justification for the reimbursement authority.” Id. at *12.

Facts

The Bottom Line:

In Trenwick America Litigation Trust v. Ernst & Young, LLP, 906 A.2d 168 (Del. Ch. 2006), the Delaware Court of Chancery definitively weighed in on the tort claim that has become known by the popular name “deepening insolvency” when it dismissed a “deepening insolvency” claim brought by a litigation trust to recover money for the benefit of the creditors of a bankrupt estate.

The District Court sustained claims of breach of fiduciary duty, fraud and deepening insolvency asserted by the successor-in-interest to the Committee of Unsecured Creditors of DVI, a defunct company, against DVI’s former officers and directors.

In North American Catholic Educational Programming Foundation, Inc. v. Gheewalla, the Delaware Supreme Court, in a case of first impression, addressed the ability of creditors to assert claims for breach of fiduciary duty against directors of a Delaware corporation that is insolvent or operating within the zone of insolvency.