A federal judge has ruled that directors and officers of a company in bankruptcy proceedings may continue to access an eroding liability policy to cover their defense costs. The court based its decision on a close examination of the policy language, and alternatively held that the individual directors and officers had shown they were entitled to relief from the automatic stay. In re: Downey Financial Corp., No. 08-bk-13041 (CSS) (Bankr.D.Del. May 7, 2010).

LLC members and other persons dealing with LLCs will be interested in a recent Florida Supreme Court case that was decided on June 24, 2010. The court’s decision in Olmstead v. FTC appears to eliminate part of the asset protection feature of single-member LLCs and calls into question the remedies available to creditors of members in multiple-member LLCs.

Earlier this month, Bettina M Whyte, the SemGroup Litigation Trustee (the "Trustee") filed approximately 350 adversary actions against various creditors in the SemCrude bankruptcy. The majority of the adversary actions are preference actions under 11 U.S.C. section 547 of the United States Bankruptcy Code. Some of the adversary actions, however, allege defendants received fraudulent transfers from various SemCrude debtors (the "Debtors").

On July 13, 2010, the U.S. Court of Appeals for the Third Circuit held, in a landmark decision, that a plan sponsor which had the right to unilaterally terminate retiree benefits outside of bankruptcy could not exercise that same right during a bankruptcy proceeding. The case, IUE-CWA v. Visteon Corp. (In re Visteon Corp.), marks the first time that a Circuit Court of Appeals ruled against a bankrupt employer in its attempt to unilaterally terminate non-vested retiree welfare benefits.

The District Court for the Northern District of Ohio recently clarified the applicable requirements for post-petition severance payments to a debtor’s former officers. In the case of In re: Forum Health, et al.1, the debtor sought authorization from the Court to make a severance payment in the amount of $18,126.00 to its former Chief Executive Officer. The Trustee objected, asserting that the debtor’s motion was not based on a program that was generally applicable to all full-time employees as required by 11 U.S.C. § 503(c)(2)(A).

The following is a list of some recent larger US bankruptcy filings in various industries. To the extent you are a creditor to any of these debtors, or other entities which may have filed for bankruptcy protection, you as a creditor are entitled to certain protections under the Bankruptcy Code.

GAMING

Riviera Holdings Corp., owner of Las Vegas’ Riviera Hotel & Casino, has filed for Chapter 11 protection.

RAZORS AND BLADES

With the August 4, 2010 auction of the division leading Texas Rangers looming and the memory of last year's bankruptcy sale of the Phoenix Coyotes fresh in our minds, there has been a lot of discussion among bankruptcy professionals about the unique issues that arise when a sports club files for bankruptcy. Generally, sports clubs file bankruptcy for the same reasons as other businesses — as a last resort to save going concern value and/or to avail themselves of some strategic advantage under the Bankruptcy Code.

When a bankruptcy court calculates the "projected disposable income" in a repayment plan proposed by an above-median-income chapter 13 debtor, the court may "account for changes in the debtor's income or expenses that are known or virtually certain at the time of confirmation," the U.S. Supreme Court held in Hamilton v. Lanning on June 7. Writing for the 8-1 majority, Justice Samuel A.

As part of the overhaul of bankruptcy laws in 1978, Congress for the first time included the definition of "claim" as part of the Bankruptcy Code. A few years later, in Avellino & Bienes v. M. Frenville Co. (In re M. Frenville Co.), the Third Circuit became the first court of appeals to examine the scope of this new definition in the context of the automatic stay.

The Bankruptcy Code treats insiders with increased scrutiny, from longer preference periods to rigorous equitable subordination principles, denial of chapter 7 trustee voting rights, disqualification in some cases of votes on a cram-down chapter 11 plan, and restrictions on postpetition key-employee compensation packages. The treatment of claims by insiders for prebankruptcy services is no exception to this general policy: section 502(b)(4) disallows insider claims for services to the extent the claim exceeds the "reasonable value" of such services.