When dealing with a debtor in Chapter 11, vendors typically seek to protect against loss by insisting upon payment in advance or on very short terms. However, the monies paid to a vendor following the filing of bankruptcy often constitute the cash collateral of a secured creditor. It is critical that a vendor determine whether the debtor has authorization to use cash collateral.
The Bottom Line:
On September 13, 2011, Judge Mary F. Walrath of the United States Bankruptcy Court for the District of Delaware granted standing for an equity committee in In re Washington Mutual, Inc. (“WaMu”) to seek “equitable disallowance” of claims held by noteholders that had traded claims after engaging in negotiations with WaMu over the terms of a global restructuring.
Sending the Debtors back to the drawing board after almost three years in bankruptcy, in a 139 page opinion, the Bankruptcy Court has for the second time denied confirmation of the Plan of Reorganization for Washington Mutual, Inc. (“WaMu”), which was the owner of the largest savings bank ever to be seized by the FDIC.
Earlier this month, James Carroll in his capacity as the "Wind Down Professional" for the Velocity Express bankruptcy, began filing preference actions against various defendants. As alleged in the preference complaints, Carroll was appointed as Velocity's Wind Down Professional under a "Wind Down Order" entered by the Delaware Bankruptcy Court in July of last year. At the time it filed for bankruptcy, Velocity was a package delivery (aka "logistics") provider whose services included customer bulk shipments, pick-up and delivery services as well as "expedited point to point servi
- On September 16, 2011, the U.S. Department of Justice amended its complaint to enjoin the AT&T/T-Mobile merger to include the states of New York, California, Illinois, Pennsylvania, Massachusetts, Washington, and Ohio as additional plaintiffs. United States v. AT&T Inc., No. 11-cv-1560 (D.D.C.).
- On September 19, 2011, the United Stated District Court for the Northern District of Texas largely denied the motion to dismiss of Verizon Communications, and related entities, against claims that they defrauded investors and creditors via spinoff company Idearc.
The U.S. Court of Appeals for the Seventh Circuit recently affirmed a bankruptcy court’s decision refusing to confirm debtors’ reorganization plan that included auction procedures that forbade secured creditors from “credit bidding” for the assets. Inre River Road Hotel Partners, LLC, No. 10-3597, 2011 WL 2547615 (7th Cir. June 28, 2011). In that case, the debtors (owners of various hotel properties) proposed a plan of reorganization that included auctioning certain properties encumbered by security interests.
The United States Bankruptcy Court for the District of Delaware, applying federal law, has held that certain lawsuits brought by a bankruptcy trustee were related claims, even though they alleged unique causes of action, because they were based upon the same course of conduct. The court also found that the trustee was pursuing claims both on behalf of the policyholder-debtor and its subsidiaries, and therefore the application of the insured versus insured exclusion was “unclear.” Nonetheless, the court found that the individual insureds were entitled to 100% of their defense cos
The scenario has become all too familiar in recent years: a borrower defaults on a loan and, when the lender pursues the loan collateral through foreclosure or other proceedings, the borrower files for bankruptcy protection. More often than not, when the lender appears in bankruptcy court to pursue its interest in the collateral, the borrower counterattacks with a host of state law lender liability claims.
Avondale Gateway Center Entitlement, LLC v. National Bank of Arizona, et al. (In re Avondale Gateway Center Entitlement, LLC), 2011 WL 1376997 (D. Ariz. Apr. 12, 2011)
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