On September 7, 2011, NewPage Corporation ("NewPage" or "Debtors") filed petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware.  As stated in NewPage's Declaration in Support of First Day Motions (the "Declaration" or "Decl."), filed with the Bankruptcy Court, NewPage produces coated paper used in magazines, brochures catalogs and textbooks.  NewPage manufactures its products in paper mills located in Kentucky, Maine, Maryland, Michigan, Minnesota, Wisconsin and in Nova Scotia, Canada.  Decl. at *4.

On September 2, the Delaware Supreme Court affirmed a holding by the Court of Chancery that creditors of insolvent Delaware limited liability companies do not have standing to sue derivatively. This contrasts with Delaware corporations: the Delaware courts have recognized that when a corporation becomes insolvent, creditors become the residual risk-bearers and are permitted to sue derivatively on behalf of a corporation to the same extent as stockholders.

When an FCC licensee goes bankrupt, the question of how to treat the interests of secured lenders is the one that, from time to time, comes up for debate. Two recent cases deal with this issue – one appearing to be an aberration that would make lending to a broadcast licensee difficult if not impossible, while the second providing a more lender-friendly interpretation after a detailed analysis of the history of FCC and court precedent on this issue, affirming what most in the broadcast community have assumed, for most of the last two decades, is settled law. We

Introduction

The United States Supreme Court recently narrowed the scope of the authority of bankruptcy courts, with potential far-reaching implications on past, present and future bankruptcy matters. The case, Stern v. Marshall, 131 S.Ct. 2594 (2011), began as a dispute between Anna Nicole Smith and the son of her late husband. After several years of litigation and one previous trip to the U.S. Supreme Court, the Court ruled bankruptcy courts lack the authority to enter judgments on counterclaims against a debtor that are based on state law.

On June 28, 2011, the Second Circuit, in a 2-1 decision, held that Bankruptcy Code section 546(e) shields from avoidance in bankruptcy cases an issuer's payments to redeem its commercial paper prior to maturity. See Enron Creditors Recovery Corp. v. Alfa, S.A.B. de CV, Enron Creditors Recovery Corp. v. ALFA, S.A.B. de C.V., Nos. 09-5122-bk(L), 09-5142-bk (Con), 2011 U.S. App. LEXIS 13177 (2d Cir. June 28, 2011). The decision marks the first time an appeals court has considered whether redemption payments constitute "settlement payments" under section 546(e).

Last week the Delaware Supreme Court ruled on the appeal of CML V, LLC v. Bax, in which the Court of Chancery held last year that a creditor of an insolvent LLC does not have standing to maintain a derivative suit in the name of the LLC against its managers.

In this memorandum opinion, the Court of Chancery held that a retiring member of a limited liability company was entitled to his proportionate share of the liquidation value, rather than the going concern value, of the company.

On September 6, 2011, a bankruptcy court approved an agreement between bankrupt bookseller Borders Group, Inc. (“Borders”) and Next Jump, Inc., (“Next Jump”) regarding Next Jump’s alleged trademark infringement and unauthorized use of Borders’ customer information.  Next Jump stipulated that it will not communicate with persons on Borders’ customer list, and that it would remove the Borders name and marks from websites that Next Jump owns or operates.

Following California-based solar manufacturer Solyndra’s announcement August 31 that it intends to file for bankruptcy, House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Oversight Subcommittee Chairman Cliff Stearns (R-TX) requested more documents from the White House regarding the Department of Energy’s $535 million loan guarantee to the company, the first to be awarded in September 2009. The bankruptcy is likely to intensify congressional criticism of the agency’s loan guarantee program and other renewable energy subsidies.