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.

Introduction

Industry observers have been waiting to see when bank failures arising out of the recent financial crisis would produce a wave of Federal Deposit Insurance Corporation (“FDIC”) litigation similar to that seen in the early 1990s after the savings and loan crisis. With its second suit in recent months, the FDIC has shown that it will aggressively pursue claims against directors and officers in connection with failed depository institutions.

Late this summer, the United States District Court for the Northern District of Illinois, Eastern Division, took on an issue of first impression – whether the fraud of one partner can be imputed to an “innocent” partner in order to render a judgment non-dischargeable.

Introduction: Earlier this year, the Third Circuit Court of Appeals' decision in In re Philadelphia Newspapers, LLC[1] sent shockwaves through the secured lending community. In a 2-1 decision, the court held that a debtor can confirm a plan of reorganization while denying the secured creditor the opportunity to credit bid for its collateral if the plan provides the lender with the "indubitable equivalent" of its claim.

Manufacturers, distributors and other merchants of goods who sell their products on credit terms routinely accept a high level of risk of defaulted payment from their customers. In good times, credit-related losses are relatively predictable as a percentage of sales and can be offset by variations in pricing and volume across a seller’s sales transactions. Unfortunately, we are far removed from the good times. The prolonged economic slump has resulted in increased payment defaults and a 150 percent rise in business bankruptcies since the summer of 2007.

The Delaware Court of Chancery has held that under the Delaware Limited Liability Company Act, creditors of an insolvent Delaware limited liability company do not have standing to pursue a derivative claim against the managers of the company.