On September 30, 2010, in In re American Safety Razor, LLC, et al, Case No 10-12351 (MFW), the United States Bankruptcy Court for the District of Delaware ruled that the debtors’ proposed bid procedures for the sale of the business were unfair and unreasonable. The bid procedures, among other things, provided too much discretion to the debtors in the auction process.

363 Sales in General

In a partial reversal of a decision from Bayou Group LLC's bankruptcy case, the US District Court for the Southern District of New York reconsidered a controversial ruling that sent shivers down the spines of institutional investors in 2008. See In re Bayou Group , LLC, No. 09 Civ. 02577 (S.D.N.Y. Sept. 17, 2010).

The United States Court of Appeals for the Sixth Circuit Court recently affirmed a Bankruptcy Appellate Panel that held that a bank which loaned an individual the funds to buy a motor vehicle could not overcome the avoidance of its lien as a preferential transfer after the person filed for bankruptcy. The Court so found because the lien at issue was not perfected under Kentucky law within the time frame necessary to be considered an exception to the avoidance of preferential transfers under the Bankruptcy Code.

Introduction

In the W.R. Grace bankruptcy, the United States Court of Appeals for the Third Circuit recently reaffirmed its prior rulings on the controversial issue of a bankruptcy court’s power to enjoin actions by third parties against non-debtors.1 Resting on prior precedent, the Third Circuit held that bankruptcy courts lack subject matter jurisdiction to enjoin third party actions that have no direct effect upon the bankruptcy estate.

The concurring opinion in a recent Third Circuit Court of Appeals case1 suggests that trademark licensees may be able to retain their rights in bankruptcy cases, even if licensors reject the license agreements. The majority did not consider whether the licensee could retain its rights. Instead, the majority held that the trademark license was not an executory contract; therefore, it could not be rejected under the Bankruptcy Code. The majority opinion applies narrowly to circumstances involving perpetual, exclusive, and royalty-free trademark licenses.

On October 21, 2010, the Ninth Circuit overruled what many thought to be well-settled law, and held that a bankruptcy trustee does not have standing to pursue alter ego claims, at least in cases governed by California law. The court first held that California state law does not recognize a general alter-ego cause of action that allows an entity and its equity holders to be treated as alter egos for purposes of all of the entity’s debts.

In a much-followed case given the recent publicity surrounding collapsed Ponzi schemes, the U.S. District Court for the Southern District of New York on September 17, 2010 reversed a decision of the Bankruptcy Court from the Southern District of New York that had broadened the scope of those facts and circumstances that may trigger inquiry notice under the "good faith" defense to a fraudulent conveyance claim. In re Bayou Group, LLC, 2010 U.S. Dist. LEXIS 99590 (S.D.N.Y. September 17, 2010).

On October 28, 2010, Banning Lewis Ranch Co. LLC and Banning Lewis Ranch Development I & II, LLC (collectively, "Banning"), filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. A copy of one of the Banning bankruptcy petition is available here for review. Banning owns over 21,000 acres of land situated on the east side of Colorado Springs, Colorado.

In August, the Chapter 7 Trustee in the National Wholesale Liquidators ("NWL") bankruptcy filing approximately 90 preference actions. Just recently, the Trustee filed over 100 more preference actions in NWL. In November of 2008, I wrote about the commencement of NWL bankruptcy (read my prior post concerning the NWL bankruptcy here).