On October 10, 2012, Vertis Holdings, Inc. ("Vertis"), and various related entities, filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. This is Vertis' third time in bankruptcy in recent years. As stated in the company's Declaration in Support of Chapter 11 Petitions (the "Decl."), Vertis filed a prepackaged bankruptcy in Delaware in July of 2008. Vertis filed its first bankruptcy in order to merge with American Color Graphics and restructure some of the company's debt. Decl.
The U.S. Bankruptcy Court for the Eastern District of Tennessee ruled in August that an LLC’s creditor could not pierce the LLC’s veil to assert its claim against the LLC’s sole member. In a twist, the LLC’s member, not the LLC, was the debtor in bankruptcy. In re Steffner, No. 11-51315, 2012 WL 3563978 (Bankr. E.D. Tenn., Aug. 17, 2012).
The Delaware District Court recently affirmed an appeal of an order denying millions of dollars in compensation to bankruptcy professionals due to certain provisions in a final debtor-in-possession (DIP) financing order. In re Barnes Bay Development Ltd. (“Barnes Bay”) was filed under Chapter 11 on March 17, 2011, case no 11-10792. On September 23, 2011, the bankruptcy court denied confirmation of the Chapter 11 plan.
The Trustee overseeing the liquidation under the Securities Investor Protection Act (“SIPA”) of Lehman Brothers Inc. (“Lehman”) in the U.S. and the Joint Administrator of Lehman Brothers International (Europe) (“LB Europe”) in the U.K. have reached an agreement in principle to resolve $38 billion in asserted claims among Lehman, LB Europe and subsidiaries and affiliates. The agreement is subject to definitive documentation and approval by the Bankruptcy Court in New York and the English High Court. The parties set December 15, 2012 as the deadline to reach a final agreement.
On September 25, 2012, Judge D. Michael Lynn for the United States Bankruptcy Court of the Northern District of Texas held that a “tail provision” for professional fees rendered prepetition survived – and was not cut off by – the debtor’s bankruptcy filing. In re Texas Rangers Baseball Partners, Case No. 10-43400-DML, 2012 WL 4464550 (Bankr. N.D. Tex. Sept. 25, 2012).
Background
This article is Part Seven in a seven-part series on how to structure sales and what to do when your customer fails to pay.
On August 2, 2012, the United States Court of Appeals for the Fifth Circuit held that a requirements contract for electricity is a forward contract for purposes of section 546(e) of the Bankruptcy Code and, therefore, settlement payments made under the contract are exempt from avoidance as preferences. Claude Lightfoot v.
Settlement of collection disputes over amounts and payment terms for bond-related claims, including in bankruptcy cases, involves issues of binding minority bondholders and releasing the indenture trustee, as well as straightforward determinations of collectability economics. Bondholders unhappy with a proposed settlement can be bound nevertheless when the deal is incorporated into a bankruptcy plan of reorganization and majority bondholders out-vote them, but only if certain requirements are met. A recent bankruptcy court decision, In re Lower Bucks Hosp., 471 B.R.
In Shelton v. CitiMortgage, Inc. (In re Shelton), --- B.R. --- (B.A.P. 8th Cir. Sept. 24, 2012), the Bankruptcy Appellate Panel for the Eighth Circuit Court of Appeals determined that a secured creditor’s lien cannot be avoided simply because the creditor’s claim was disallowed as being filed after the proof of claim bar date.
On August 28, 2012, the United States District Court for the Northern District of Texas vacated a series of bankruptcy court rulings that had blocked Vitro SAB’s noteholders from filing involuntary bankruptcy petitions against Vitro’s non-debtor subsidiary guarantors. In a decision authored by Chief Judge Sidney A.