Liquidating Trustee Starts AES Eastern Energy, L.P. Bankruptcy Preference Adversary Proceedings

On on June 7, 2013, Eugene I. Davis Liquidating Trustee in the AES Eastern Energy, L.P. Bankruptcy, commenced Chapter 5 preferential transfer recovery litigation in the District of Delaware. At least the initial round of preference complaints mostly targeted small to mid market suppliers with preference claims amounts heavily concentrated in the low to mid five figures.

Motion to Dismiss Response – Debtor Could not Release What It Did Not Own

Plaintiff’s Answering Brief in Opposition to Defendant’s Motion to Dismiss filed in the Evergreen Solar, Inc. Bankruptcy – U.S. Bank National Association, v. Massachusetts Development Finance Agency (In re Evergreen Solar, Inc.), AP No. 13-50905 Dkt.No. 7 (Bankr. D. Del May 8, 2013 )  before U.S. Bankruptcy Judge Mary F. Walrath filed by  ASK LLP (St. Paul, MN) Joseph L. Steinfeld and Kendra K. Bader; Gellert Scali Busenkell & Brown, LLC (Wilmington, DE)  Ronald S. Gellert .  -  Opposition to Motion to Dismiss $1 million preference claim on grounds that Debtor no longer owned or held the preference claim at the time of entering into a release of claims with the Defendant.

When a Chapter 7 Trustee’s Failure to Plead a Preference Reaches Inexplicability

In a rare motion practice loss for a Chapter 7 Trustee, District of Delaware Bankruptcy Judge Brendan Linehan Shannon grants the motion of Defendant International Securities Exchange (“ISE”) to dismiss a bankruptcy preference avoidance complaint for failure to state a claim for relief.   Judge Shannon holds that the Chapter 7 trustee’s Section 547 preferential transfer count in its amended complaint fails to sufficiently identify the nature of the antecedent debt.  Giuliano v. International Securities Exchange, Adv. Proc. No. 12-50921 Dkt No. 48 (Bankr.D. Del. May 1, 2013).  Unfortunately, procedural posture and factual context dispel any comfort preference defendants might find in the holding.    

RG Steel Warren Starts WP Steel Venture LLC Bankruptcy Preference Recovery

On January 18, 2013, RG Steel Warren, LLC, Debtor in Possession in the WP Steel Venture LLC Bankruptcy, commenced Chapter 5 preferential transfer recovery litigation with the filing of 137 complaints in the District of Delaware . These complaints are in addition to the 287 preference complaints already filed by co-debtor RG Steel Sparrows Point LLC.  These complaints add $40 million in preference claims to the more than $107 million filed by RG Steel Sparrows Point.  The plaintiff may also be expecting that the yield on these claims will be higher than usual . . . the ordinary course of business defense appears questionable for many of the preference period payments.

RG Steel Sparrows Point Starts WP Steel Venture LLC Bankruptcy Preference Recovery

On from January 7 to January 9, 2013, RG Steel Sparrows Point, LLC, Debtor in Possession in the WP Steel Venture LLC Bankruptcy, commenced Chapter 5 preferential transfer recovery litigation with the filing of 287 complaints in the District of Delaware .   This plaintiff/debtor in possession has tapped a honey hole of preference claims totaling, to this point, more than $107 million. The plaintiff may also be expecting that the yield on these claims will be higher than usual . . . the ordinary course of business defense appears questionable for many of the preference period payments.

Chapter 7 Trustee Starts Conex International Bankruptcy Preference Adversary Proceedings

On on December 5, 2012, Charles A. Stanziale, Jr., Chapter 7 Trustee in the Conex Holdings, LLC Bankruptcy, commenced mass Chapter 5 preferential transfer recovery litigation  in the Bankruptcy Court for the District of Delaware.   The Debtors bankruptcy case was commenced by the filing of an involuntary petition by three secured creditors, and trade creditors seemingly were caught off guard.  Unlike many Chapter 7 involuntary cases, the pool of trade creditor defendants is quite large and many of the preference claims are substantial.

The Chapter 7 Trustee apparently does not have access to much of the Debtors’ trade creditor information.  The complaints are weak in the identification of antecedent debt.  However, the Trustee may benefit from some leniency in pleading standard application afforded Chapter 7 trustees by the Delaware Bankruptcy Court.

Vertis, Inc. Bankruptcy – 30 Largest Unsecured Creditors

Vertis Holdings, Inc. and 7 associated debtorsFN1 (the “Debtors”) filed voluntary petitions under Chapter 11 of the Bankruptcy Code on October 10, 2012 in the Bankruptcy Court for the District of Delaware (Case No. 12-12821). The Honorable Judge Christopher S. Sontchi has been assigned to the case. This initial note provides the Debtors’ consolidated list of their 30 largest unsecured creditors.