In this opinion, the Court of Chancery granted the defendants’ motion to dismiss the plaintiff’s derivative claims against the defendants for breach of fiduciary duties, holding that, under Section 18-1002 of the Delaware Limited Liability Company Act (the “LLC Act”), creditors of an insolvent LLC lack standing to sue derivatively.

In CML V, LLC v Bax, the Court of Chancery held that a creditor of JetDirect Aviation Holdings, LLC, a Delaware limited liability company ("JetDirect"), did not have derivative standing to assert breach of fiduciary duty claims against the board of managers of the insolvent JetDirect. The creditors would have had standing if JetDirect were a Delaware corporation, but the Court found that the Delaware LLC Act does not allow an LLC’s creditors to bring derivative claims when a Delaware LLC is insolvent (or at any other time).

Last Thursday, a Delaware Bankruptcy Court disqualified two law firms from representing an Official Committee of Unsecured Creditors based on their conduct in soliciting proxies from creditors who were not existing firm clients. In re Universal Building Products, No. 10-12453 (Bankr. D. Del. Nov. 4, 2010), involved an extreme fact pattern but it may nonetheless have a substantial effect not only on the selection of professionals for future Committees but also on the appointment of creditors to Committees, at least in Delaware.

A receiver is an officer of the court concerning property in receivership, holding possession of the property for the court that appointed the receiver.

The University of Texas' 29th Annual Jay L. Westbrook Bankruptcy Conference November 19, 2010

Section 330 of the Bankruptcy Code provides a statutory framework for compensation of professionals who are paid from the bankruptcy estate. Compensation awarded under section 330 is afforded administrative expense status under section 503(b)(2) and given second priority in the distribution of an estate pursuant to section 507(a)(2) of the Bankruptcy Code.

Creditors of insolvent Delaware corporations have recourse against corporate directors and officers whose disloyal or self-dealing conduct reduces the corporation’s assets available for distribution. Delaware courts have held that directors and officers of insolvent corporations owe fiduciary duties to creditors as the principal stakeholders in the remaining corporate assets. Where those duties are breached, creditors have standing to bring actions derivatively on behalf of the corporation for damages to the corporation. However, in a recent decision by Vice Chancellor J.

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 following is a list of some recent larger U.S. bankruptcy filings in various industries. To the extent you are a creditor to any of these debtors, or other entities which may have filed for bankruptcy protection, you as a creditor are entitled to certain protections under the Bankruptcy Code.

HEATING & AIR CONDITIONING

Wolverine Tube Inc. and several affiliates filed prearranged Chapter 11 petitions after reaching a deal with noteholders.

FINANCIAL

Ambac Financial Group Inc. filed for Chapter 11 protection.

The current cycle of Chapter 11 corporate bankruptcies involves many cases where the debtor seeks to achieve a balance-sheet restructuring by converting debt into equity. When consensus cannot be achieved, junior stakeholders (i.e., second lien creditors, unsecured creditors and/or equity) will often contest plan confirmation on the grounds that the proposed plan provides more than 100% recovery to the senior creditors. Valuation plays the central role in these cases.