In an April 24, 2007 order, the United States Bankruptcy Court for the District of Delaware granted certain insurers' motion for leave to pursue a coverage action against the debtor, Federal-Mogul Global, Inc., in New York state court regarding the debtor's asbestos liability. In re Federal-Mogul Global, Inc., No. 01-10578 (Bankr. D. Del. Apr. 24, 2007). The insurer had filed a declaratory judgment action in New York state court against the debtor. In response, the debtor filed an identical action in New Jersey state court.

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 U.S. Bankruptcy Code provides for the appointment of a bankruptcy examiner to investigate the debtor with respect to allegations of fraud, dishonesty, incompetence, misconduct or mismanagement. The right examiner, with a clearly defined mission, will have a major influence on the bankruptcy process. The difference between a successful financial restructuring or liquidation-resulting in substantial recoveries for the key constituencies-and a time-consuming (and asset-consuming) meltdown, can depend on the approach of the examiner and the examiner's support team.

The United States Bankruptcy Court for the District of Delaware has held that policy proceeds were not part of the insured entity’s bankruptcy estate because previous entity claims were dismissed with prejudice, it was highly speculative that the bankruptcy trustee would approve indemnification of directors and officers and the policy’s priority of payment provision provided that entity coverage was only available after payment of proceeds for direct coverage to insured persons. In re Downey Fin. Corp., 428 B.R. 595 (D. Del. Bankr. May 7, 2010).

In an adversary proceeding brought by a liquidating company to determine the availability of coverage under the debtor's insurance policies, the United States District Court for the District of Delaware has held that the insolvency of an underlying insurer did not affect an excess carrier's obligation for claims within its own layer of coverage. In re Integrated Health Services, Inc., 2007 WL 2687593 (D. Del. Sept. 12, 2007). Although the adversary proceeding was initially filed in bankruptcy court, it was consensually withdrawn to the district court.

Some legal commentators have lamented the extent to which lenders have been able to use debtor in possession (“DIP”) financing arrangements to gain control over an entire Chapter 11 case.

The Bankruptcy Court for the District of Delaware recently held in In re Woodbridge Group of Companies, LLC that while Rule 3001 of the Bankruptcy Code provides a mechanism for transfers of claims, Rule 3001 is not a substantive provision allowing claims trading for notes with legally valid anti-assignment provisions.

Background

A Belgian diamond and precious metals trader, Exelco NV, has filed a voluntary petition under Chapter 15 in the Bankruptcy Court for the District of Delaware (Case No. 17-12409). Exelco North America, Inc., along with three other American affiliates of Exelco NV, previously filed for Chapter 11 on September 27, 2017 (Lead Case No. 17-12029).

Setoff is a doctrine based as much on practical considerations as on equitable ones.

Must creditors holding claims denominated in a foreign currency against a debtor in a US bankruptcy case bear the risk of a postpetition decline in the value of the dollar? In In re Global Power Equipment Group Inc.,1 the Bankruptcy Court for the District of Delaware says yes, holding that, pursuant to section 502(b) of the Bankruptcy Code, a contested claim denominated in foreign currency must be converted into United States currency as of the petition date instead of a later judgment or breach date.

The Conversion Date Dispute