On Monday, U.S. District Court Judge Shira Scheindlin lifted a hold on a bankruptcy court order approving Adelphia Communications’ Chapter 11 reorganization plan, thereby enabling Time Warner Cable (TWC) to proceed Tuesday with plans to transform itself into a publicly-traded company. Although U.S. Bankruptcy Court Judge Robert Gerber signed off on Adelphia’s reorganization plan on January 3, Scheindlin—at the behest of bondholders who objected to the plan—had blocked implementation pending review of the bondholders’ claims.
In light of the continued favorable business climate and ample liquidity in the U.S., the falloff in business bankruptcy filings in 2006 should come as no big surprise. Unlike 2005, which added three new stars to the all-time hit parade of chapter 11 “mega” cases, 2006 saw no new additions to the Top 10 list for public-company chapter 11 filings. Overall, the number of business bankruptcy filings dropped 20 percent in fiscal year 2006, the fifth straight year a decline was reported, according to statistics released by the Administrative Office of the U.S. Courts in October of 2006.
In a recent ruling likely to be of great interest to debtors and creditors alike, the United States District Court for the Northern District of Georgia (the “Court”) ruled in MC Asset Recovery v. Southern Company1 (the “Southern Co. Litigation”) that fraudulent transfer claims held by a bankruptcy trustee or debtor in possession under the Bankruptcy Code continue to be viable at the conclusion of a bankruptcy case, even if all creditors’ claims have already been satisfied in full pursuant to a plan of reorganization.
A district court judgment dismissing a $500 million fraudulent transfer and breach of fiduciary duty suit against Campbell Soup Co., the former parent of Vlasic Foods International (“VFI” or “the debtor”), was affirmed by the United States Court of Appeals for the Third Circuit, on March 30, 2007. VFB, LLC v. Campbell Soup Co., 2007 WL 942360 (3d Cir. 3/30/07).
New York, NY – May 21, 2007- On May 21, 2007, the United States Supreme Court agreed to review a decision by the United States Court of Appeals for the Second Circuit that Klein & Co. Futures, Inc., a futures commission merchant, lacked standing under the private remedy provisions of the Commodity Exchange Act to bring a suit for damages against a board of trade and its subsidiaries for failure to enforce rules to prevent a manipulation scheme that led to Klein & Co.’s collapse (Klein & Co. Futures Inc. v. Board of Trade of City of New York, U.S., No.
The Third Circuit Court of Appeals recently upheld the dismissal of a suit by the shareholders and creditors of Vlasic Foods International, Inc., a former Campbell Soup subsidiary that had been “spun out” of the parent. The case, VFB, LLC v. Campbell Soup Co. (March 30, 2007), upholds the broad discretion of trial courts to determine valuation issues in the context of corporate transactions and, more specifi cally, gives great weight to market capitalization as a measure of value.
In re Adelphia Communications Corp.,1 the United States Bankruptcy Court for the Southern District of New York recently held that neither a creditor’s aggressive litigation tactics resulting in the creditor’s prospective receipt under a proposed plan of special consideration for voting in favor of the plan, which special consideration other members of the same class that voted against the plan would not obtain, nor the creditor’s ownership of claims in several debtors, in a multi-debtor Chapter 11 case, was a sufficient basis for the “draconian sanction” of disallowing such creditor’s votes
In a recent decision by the Bankruptcy Court for the Southern District of Texas, In re Scotia Development, LLC,1 Judge Richard S. Schmidt denied the motions of several creditors and the State of California seeking transfer of venue from the Southern District of Texas to the Northern District of California, finding that venue was proper in Texas and that California would not be a more convenient forum for the financial restructuring of the debtors.
Background
The hurdles for KERP programs have been raised too high, causing debtors to lose critical personnel to the detriment of post-petition operations, say Frost Brown Todd’s Ronald Gold and Doug Lutz in our series of chats with high-profile bankruptcy lawyers.
Q. What’s the most challenging bankruptcy you’ve worked on, and why?