The Bankruptcy Code provides several protections for parties that have supplied goods or services to a debtor on credit prior to the debtor’s bankruptcy petition date.
Good v RMR Investments, Inc, 428 BR 249 (ED Texas, March 31, 2010)
CASE SNAPSHOT
A secured creditor in a chapter 11 case objected to the confirmation of the reorganization plan of the debtor, arguing that the proper “cramdown” interest rate (court-modified rate) was the pre-petition contractual default rate, rather than the significantly lower cramdown rate. After the debtor appealed, the District Court affirmed, holding that utilizing the contract rate of interest was appropriate because the debtor was solvent.
In re Goody’s Family Clothing, Inc- F3d – 2010 WL 2671929 (3d Cir June 29, 2010)
CASE SNAPSHOT
JELD-WEN, Inc v Van Brunt (In re Grossman’s Inc), (3d Cir No 09-1563, June 2, 2010)
CASE SNAPSHOT
In re Spansion, Inc, 426 BR 114 (Bankr Del April 1, 2010)
CASE SNAPSHOT
Suppliers to chapter 11 debtors-in-possession should always ensure that they are not being paid from the debtor’s “cash collateral” without court approval. Marathon Petroleum Company supplied products to debtor Delco Oil in the ordinary course of its business during the bankruptcy case, but was forced to return all of the postpetition payments it received from Delco, pursuant to section 549 of the Bankruptcy Code. Marathon was required to return these payments because they were deemed part of the cash collateral that was secured by Delco’s pre-petition creditor, CapitalSource Finance.
Introduction
After months of negotiations and conferences among key legislators, President Obama signed into law a final version of regulatory reform legislation on July 21, 2010. More than 2,000 pages long, the “Dodd-Frank Wall Street Reform and Consumer Protection Act” (the Act) provides new legal guidelines for both “financial companies” and non-financial companies and instructs federal agencies to develop a myriad of regulations to enforce the concepts provided in the Act.
In a decision that may create a significant roadblock for companies saddled with environmental clean-up liability to continue as a going concern, the Seventh Circuit in U.S. v. Apex Oil Company, Inc., 579 F.3d 734 (7th Cir. 2009) affirmed a district court injunction requiring the clean-up of a contaminated site in Illinois under section 7003 of the Resource Conservation and Recovery Act (RCRA) despite the company's bankruptcy. On September 27, 2010, the Supreme Court is scheduled to discuss whether to grant review of the Apex decision.
Once a company files a Chapter 11 bankruptcy petition (to sell its assets, reorganize or liquidate), Bankruptcy Code § 1114 sets forth a detailed procedure for the employer to follow to modify or terminate certain retiree benefits. Among other things, § 1114 imposes on the employer the burden of showing that the elimination or modification of benefits is necessary to permit reorganization.