N.Y. Bankrutpcy Judge Peck Rejects Contract Exception to Mutuality Requirement for Sec. 553 Setoff
10/04/2011 – Memorandum Decision Enforcing the Automatic Stay filed in the Lehman Brothers Inc. Securities Investor Protection Act proceedings before U.S. Bankruptcy Judge James M. Peck in the United States Bankruptcy Court for the Southern District of New York.
Southern District of New York Bankruptcy Judge James M. Peck grants the motion of James W. Giddens, as Trustee (the “SIPA Trustee”) of Lehman Brothers Inc. (“LBI”) and orders UBS AG (“UBS”) to turn over $23 million of “excess collateral” under a terminated swap agreement. Judge Peck rejects UBS argument that a setoff right created by contract, either renders inapplicable or satisfies the mutuality requirement specified in 11 U.S.C. § 553(a). Judge Peck holds that “a contractual right of setoff that permits netting by multiple affiliated members of the same corporate family outside of bankruptcy may no longer be enforced after commencement of a [bankruptcy case].” ). »»» Read rest of article . . .
Real Mex Restaurants, Inc. – 20 Largest Unsecured Creditors
Real Mex Restaurants, Inc. and 16 associated debtorsFN1 (the “Debtors”) filed voluntary petitions under Chapter 11 of the Bankruptcy Code on October 4, 2011 in the Bankruptcy Court for the District of Delaware (Case No. 11-13122). The Honorable Peter J. Walsh has been assigned to the case. This initial note provides the Debtors’ consolidated list of their 20 largest unsecured creditors. »»» Read rest of article . . .
Northern District of California Bankruptcy Judge – Post Stern, Business as Usual in Hearing “Jewel Waiver” Fraudulent Conveyance Claims
09/28/2011 – Recommendation of Bankruptcy Judge Regarding Motions To Withdraw The Reference filed in the Heller Ehrman LLP Adversary Proceedings by Arnold and Porter, LLP before U.S. Bankruptcy Judge Dennis Montali in the United States Bankruptcy Court for the Northern District of California.
U.S. Bankruptcy Judge Dennis Montali minces no words in his recommendation to the District Court against the motions of sixteen law firm defendants[FN1] to withdraw of the reference under Stern v. Marshall, 131 S.Ct. 2594 (2011). The adversary proceedings were filed by the law firm Heller Ehrman LLP (“Heller”) as liquidating debtor. Heller seeks avoidance of a California “Jewel Waiver” as an actual and fraudulent conveyance and recovery of the value of “unfinished business” taken to the defendant law firms by former Heller partners. Judge Montali refuses find any applicability of Stern beyond its narrow holding. He concludes that “given that Heller’s claims do arise from bankruptcy law (11 U.S.C. §§ 544(b) & 548) and would not exist but for the bankruptcy (unlike the counterclaims in Stern), … Stern may not limit [the bankruptcy court's] power to enter a final judgment on [Heller's claims].” »»» Read rest of article . . .
Lehman Brothers Holdings Inc. et al v. JPMorgan Chase Bank, N.A. – JPMorgans Submission in Response to Case Management Order
09/26/2011 – JPMorgans Submission in Response to Case Management Order filed in the Lehman Brothers Holdings Inc. Adversary Proceedings by JPMorgan Chase Bank, N.A. before U.S. Bankruptcy Judge James M. Peck in the Southern District of New York (Manhattan) filed by Wachtell, Lipton, Rosen & Katz (New York, NY) attorney Paul Vizcarrondo, Jr., Of Counsel: Harold S. Novikoff; Amy R. Wolf; Douglas K. Mayer; Emil A. Kleinhaus; Alexander B. Lees.
On August 15, 2011, U.S. Bankruptcy Judge James M. Peck issued a Case Management Order in Relation to the Impact of Stern v. Marshall (the “Stern Order”). Both the Plaintiffs, Lehman Brothers Holdings Inc. and Official Committee of Unsecured Creditors of Lehman Brothers Holdings Inc. (“Lehman”) and Defendant JPMorgan Chase Bank, N.A. (“JPMorgan”) each were directed, inter alia, to address each count of the 49 count amended complaint separately in stating whether such court was susceptible to: a ruling by the Bankruptcy Court on the pending motion to dismiss; either final adjudication by the Bankruptcy Court; or issuance of a report and recommendation by the Bankruptcy Court. JPMorgan’s response to this directive from Judge Peck is set forth below. Whether ultimately determined to be a correct or incorrect analysis of Stern, the issue analysis and presentation of JPMorgan is impressive. »»» Read rest of article . . .
Barclays Capital Inc. Opposition to Pirinate Consulting Group’s Motion to Amend it Avoidance Complaint
09/23/2011 – Defendants Brief in Opposition to Plaintiffs Motion for Leave to Amend Complaint filed in the Spansion, Inc. Adversary Proceedings by Barclays Capital Inc. before Chief, U.S. Bankruptcy Judge Kevin J. Carey in the District of Delaware filed by Richards, Layton & Finger, P.A. (Wilmington, Delaware) attorneys Robert J. Steam, Jr., Julie A. Finocchiaro, and Amanda R. Steele .
Defendant Barclays Capital Inc. (“Barclays” or “Defendant”) opposes the motion of the Pirinate Consulting Group, LLC (“Plaintiff’), Claims Agent for the Chapter 11 Estates of Spansion, Inc., et al. (the “Debtors”) to amend its avoidance complaint. Barclay’s opposition is based on dual grounds – first, the amended complaint so drastically alters the original pleading that can not relate back; and second, the proposed amend complaint itself would be would be subject to Rule 12(b)(6) dismissal. Barclays weaves together multiple limitations on avoidance actions, some common and some obscure, into a formidable effort to dismiss the Plaintiff’s avoidance complaint in its entirety. »»» Read rest of article . . .
MCTS2 Starts Velocity Express, Inc. Bankruptcy Preference Adversary Proceedings
On on September 21, 2011 and September 22, 2011, MCTS2 in the Velocity Express, Inc. Bankruptcy, commenced Chapter 5 preferential transfer recovery litigation with the filing of 79 complaints in the District of Delaware. »»» Read rest of article . . .
Thelen LLP Chapter 7 Bankruptcy Trustee Files Adversary Proceedings against Former Partners, Their New Law Firms
From September 15, 2011 to September 17, 2011, Yann Geron, as Chapter 7 Trustee in the bankruptcy of the former law firm Thelen LLC, filed 98 adversary proceeding complaints in the Southern District of New York against former Thelen partners and their new law firms and former Thelen clients. The Trustee sets the stage for each of these mass filing by describing Thelen’s rapid demise — from December 2006, when Thelen had 630 attorney’s, including 219 equity partners, to Thelen’s decision in October 2008 to dissolve the firm leaving $223 million in liabilities in excess of assets. »»» Read rest of article . . .
Delaware Bankruptcy Judge Walsh Rejects Substantive Consolidation Retroactivity by Implication
District of Delaware, United States Bankruptcy Judge Peter J. Walsh issues his opinion in Giuliano v. Shorenstein Company LLC (In re Sunset Aviation, Inc. ), Adv. Proc. No. 11-50965 (Bankr. D. Del. September 7, 2011) holding that an order for substantive consolidation is not retroactively effective when it fails to expressly provide that it is nunc pro tunc. Based on this holding, Judge Walsh dismisses, with prejudice, the bankruptcy preference count of the complaint by Alfred T. Giuliano, Chapter 7 Trustee for the Bankruptcy Estates of Sunset Aviation (the “Trustee”). Fundamentally, Judge Walsh rejected the Trustee’s urging for the Court to perfunctorily use a substantive consolidation order to rewrite Section 547 of the Bankruptcy Code. »»» Read rest of article . . .
Bankruptcy Judge Lundin Opinion – Statutory Language, Legislative History – Venue Limitation Applies to Bankruptcy Preference Actions
Middle District of Tennessee, U.S. Bankruptcy Judge Keith M. Lundin opines that the small-dollar home court venue exception in 28 U.S.C. § 1409(b) applies to bankruptcy preference recovery litigation. To reach that conclusion, he holds that there is an “overlap between ‘arising under title 11′ and ‘arising in’ a case under Title 11 for purposes of venue under § 1409.” Judge Lundin thereby honors the clear legislative intent found in his scholarly, exhaustive review of the legislative history of Section 1409. »»» Read rest of article . . .
NewPage Corporation – 30 Largest Unsecured Creditors
NewPage Corporation and 13 associated debtorsFN1 (the “Debtors”) filed voluntary petitions under Chapter 11 of the Bankruptcy Code on September 7, 2011 in the Bankruptcy Court for the District of Delaware (Case No. 11-12804). The Honorable Kevin Gross has been assigned to the case. This initial note provides the Debtors’ consolidated list of their 30 largest unsecured creditors. »»» Read rest of article . . .
