The United States District Court in Delaware recently issued a welcome decision for private equity firms whose portfolio companies run afoul of the Worker Adjustment and Retraining Notification Act (the “WARN Act”).  In In re Jevic Holding Corp. (PDF), the Court affirmed a bankruptcy court decision holding that Sun Capital Partners (“Sun”) was not liable for the WARN Act violations of Jevic Transportation Inc.

In its October 1, 2014 decision in Quadrant Structured Prods. Co. v. Vertin, et al., C.A. No. 6990, the Delaware Court of Chancery applied the protections afforded under the business judgment rule to investment strategies adopted by directors of insolvent corporations. The court held that the business judgment rule barred derivative claims asserted against directors by a creditor who had alleged that the company’s high-risk investment strategy was implemented for the purpose of benefitting the corporation’s controller at the creditors’ expense.

On September 30, 2014, in In re SemCrude, L.P.,1 the United States District Court for the District of Delaware, affirming the Bankruptcy Court’s decision, held that direct partnership distributions by debtor SemGroup, L.P. (the “Debtor”) and indirect partnership distributions by its general partner, SemGroup G.P., L.L.C., to certain limited and general partners could not be avoided as constructive fraudulent transfers.

A bankruptcy can be hazardous to the health of an executive’s bonus check.  Sometimes, however, an executive can survive an attack on a bonus in a bankruptcy, and come out clean on the other side.  For example, we covered here how one executive succeeded in keeping most of his incentive pa

On September 29, 2014, the United States District Court for the District of Delaware affirmed an earlier decision of the Delaware Bankruptcy Court in In re Jevic Holding Corp.1 holding that a private equity sponsor was not liable for its portfolio company’s alleged violations of the WARN Act. The District Court ruling is good news for private equity funds and other investors with portfolio companies in distress.

In Quadrant Structured Products Company, Ltd. v. Vertin (October 1, 2014), Vice Chancellor Laster clarified the Delaware Chancery Court’s approach to breach of fiduciary duty derivative actions brought by creditors against the directors of an insolvent corporation.

Loan agreements and bond indentures often contain "make-whole" provisions, which provide yield protection to lenders and investors in the event of a repayment prior to maturity. They accomplish this by requiring the borrower to pay a premium for pre-payment of a loan. This allows lenders to lock-in a guaranteed rate of return when they agree to provide financing. Borrowers also benefit since the yield protection allows lenders to offer lower interest rates or fees than they would absent such protection.

In a recent decision from the Delaware bankruptcy court, Judge Christopher S. Sontchi joined the debate over the interpretation of section 547(c)(4)(B) of the Bankruptcy Code, which sets forth the new value defense to a preference claim. 

The United States District Court for the District of Delaware recently entered a Memorandum Opinion (the “District Court Opinion”) concerning the constitutional sufficiency of the publication of the bar date notice in the New Century bankruptcy as it applies to unknown creditors.1 The District Court vacated the Bankruptcy Court’s August 30, 2013,order (the “Constructive Notice Order”), which had approved the constitutional sufficiency of notice to unknown creditors by publication in The Wall Street Journal and the Orange County Register.

Judge Christopher Sontchi of the United States Bankruptcy Court for the District of Delaware has now weighed in on a hotly debated circuit court split.