On January 31, 2013, the Bankruptcy Court for the District of Delaware confirmed the debtors’ proposed plan of reorganization in In re Indianapolis Downs, LLC,¹ declining to “designate” or disallow the votes of several substantial creditors that had entered into a plan support or “lockup” agreement with the debtors after the bankruptcy filing. In a written decision,² the Bankruptcy Court provided important guidance concerning the permissibility of post-petition plan support agreements entered into before the court approves a disclosure statement.

The U.S. Court of Appeals for the Seventh Circuit, on Feb. 14, 2013, held that an insider of a Chapter 11 partnership debtor cannot avoid the “competition rule” in a new-value reorganization plan. The debtor’s equity owner arranged for his wife, also an “insider,” to contribute new value to obtain the equity of the reorganized debtor. In re Castleton Plaza, LP, — F.3d –––, 2013 WL 537269 at *1 (7^th Cir., Feb. 14, 2013).

A recent ruling in the American Airlines bankruptcy case enforcing an automatic acceleration upon bankruptcy provision serves as a reminder that the enforceability of so-called ipso facto provisions in debt instruments remains an unsettled, forum-dependent question.      

A long-struggling company’s failure to issue written notice to its employees 60 days in advance of shutting down operations, as required by the Worker Adjustment and Retraining Notification (“WARN”) Act, is excused by the Act’s “unforeseeable business circumstances” exception, the federal appeals court in New Orleans held. Angles v. Flexible Flyer Liquidating Trust, 2013 U.S. App. LEXIS 2850 (5th Cir. Feb. 11, 2013). 

In re 18 RVC, LLC, Case No. 812-72378-reg (Bankr. E.D.N.Y., Oct. 22, 2012)

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In re Tracy Broadcasting Corporation, No. 11-1453 (10th Cir., Oct. 16, 2012)

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In re Geijsel, et al., Case No. 10-43979-11 (Bankr. N.D. Texas, Aug. 24, 2012)

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In re Premier Golf Properties, L.P., BAP No. SC- 11-1508-HPaJu (9th Cir. BAP, Aug. 13, 2012)

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The Ninth Circuit B.A.P. affirmed the bankruptcy court decision that post-petition income from greens fees and driving range fees were not “rents, proceeds, or profits” of the secured lender’s pre-petition blanket security interest on all real and personal property (and “all proceeds thereof”) within the meaning of section 552(b), and thus were not cash collateral.

On February 13, 2013, the U.S. Bankruptcy Court for the Southern District of New York approved a stipulation between LightSquared and, among others, its lenders to extend until July 15, 2013 LightSquared’s exclusive right to file a Chapter 11 plan of reorganization. That right was due to expire on January 31, 2013, and then was extended until the court ruled on LightSquared’s motion to extend that date.

In re S. White Transp., Inc., 473 B.R. 695 (S.D. Miss. 2012)

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