Mark E Felger

December 12, 2012 | Delaware Business Court Insider

In what the court characterized as an apparent matter of first impression, U.S. Bankruptcy Judge Christopher S. Sontchi of the District of Delaware considered what legal standard applies in a Chapter 15 case to a transfer of assets located in the United States pursuant to a "global" transaction previously approved by another court in a foreign main proceeding. In In re Elpida Memory , Case No. 12-10947(CSS) (D. Del. Bankr. Nov. 20, 2012), the court held, based upon the plain meaning of the statute and its legislative history, that it must review the transaction to the extent it impacts assets in the United States under the legal standards governing a transfer by a trustee outside the ordinary course of business, i.e., whether the transaction is a sound exercise of the trustee's business judgment. In so doing, Sontchi rejected the argument of the foreign representatives that, to the extent that the non-U.S. court in the foreign main proceeding authorized the transfer of assets over which it had shared jurisdiction, the U.S. court was required to grant comity to the orders of that court and to approve the application of the foreign representatives without more.

By Barry M. Klayman and Mark E. Felger

7 minute read

January 18, 2012 | Delaware Business Court Insider

On Dec. 20, Judge Christopher S. Sontchi in In re USDigital Inc. became the first Delaware bankruptcy judge to set forth his views on the meaning and significance of the Supreme Court's decision in Stern v. Marshall . Sontchi's opinion is significant because it construes the Stern decision very narrowly and signals to the bankruptcy bar that the court will continue to protect its judicial authority to enter final orders.

By Barry M. Klayman and Mark E. Felger Special to the DBCI

6 minute read

August 15, 2012 | Delaware Business Court Insider

It is common practice in Chancery Court cases to enter into a stipulated confidentiality order permitting the parties to designate certain documents as confidential and to limit their disclosure and use by the parties in the pending litigation.

By Barry M. Klayman and Mark E. Felger Special to the DBCI

5 minute read

November 21, 2012 | Delaware Business Court Insider

How far will the bankruptcy court go in exercising post-confirmation jurisdiction in an adversary action based on a pre-petition state law claim? The answer, as shown in the case In re Washington Mutual ( Washington Mutual v. XL Specialty Insurance ), Bankr. Del., Oct. 4, 2012, is not far at all.

By Barry M. Klayman and Mark E. Felger

6 minute read

March 13, 2013 | Delaware Business Court Insider

On January 2, the Delaware Supreme Court issued a trilogy of cases dealing generally with the issue of whether a case should be dismissed for the attorneys' failure to obey scheduling orders.

By Barry M. Klayman and Mark E. Felger

5 minute read

April 10, 2013 | Delaware Business Court Insider

In Raul v. Rynd, C.A. No. 11-560-LPS (D. Del. Mar. 14, 2013), the U.S. District Court for the District of Delaware dismissed a derivative lawsuit brought on behalf of a Delaware corporation alleging that its board of directors, assisted by the board's compensation consultant, breached fiduciary duties and securities laws by approving compensation to the company's top executives despite the failure of a "say-on-pay" shareholder vote on that compensation.

By Barry M. Klayman and Mark E. Felger

8 minute read

January 09, 2013 | Delaware Business Court Insider

Must a shareholder class representative in a breach of fiduciary duty action own stock in the corporation continuously through the final class certification to have standing to represent the class? And when should the Court of Chancery exercise its discretion to allow a shareholder to opt out of a 23(b)(2) class action, which ordinarily does not include opt-out rights? The Delaware Supreme Court answered both questions last month in In re Celera Shareholder Litigation , No. 212, 2012 (Del. Dec. 27, 2012). In affirming and reversing the Court of Chancery, the Supreme Court held that a shareholder class representative need not own stock through final class certification to have standing to represent the class, but under the circumstances of the case, the Court of Chancery should have exercised its discretion to allow the appellant to opt out of the shareholder class so that it could pursue its individual claims for monetary damages against the defendants.

By Barry M. Klayman and Mark E. Felger

8 minute read

March 28, 2012 | Delaware Business Court Insider

In In re Majestic Star Casino LLC , U.S. Bankruptcy Court Judge Kevin Gross of the District of Delaware answered a question of first impression: whether a nondebtor parent's revocation of its S corporation status, which, subsequently, by operation of the Internal Revenue Code revoked the debtor-subsidiary's "qualified Subchapter S subsidiary" (QSub) status, is an avoidable transfer of estate property in violation of Bankruptcy Code §549. The court answered the question in the affirmative, voided the parent corporation's revocation of its Subchapter S status and the termination of the subsidiary corporation's QSub status, and directed the defendants to take all actions necessary to restore the subsidiary corporation's QSub status and to return all sums paid by the subsidiary as a result of the termination of its QSub status.

By Barry M. Klayman and Mark E. Felger

8 minute read

February 13, 2013 | Delaware Business Court Insider

In WM Inland Adjacent LLC v. Mervyn's LLC , Adv. Pro. No. 09-50920 (KG) (Del. Bankr. Jan. 8, 2013), the U.S. Bankruptcy Court for the District of Delaware faced a question of first impression: whether a claim arising from an indemnification provision in a nonresidential commercial lease with the debtor, which the debtor rejected post-petition, was entitled to administrative priority under §365(d)(3), or was a pre-petition, general unsecured claim under §502(g).

By Barry M. Klayman and Mark E. Felger

6 minute read

February 08, 2012 | Delaware Business Court Insider

Section 548 of the Bankruptcy Code allows a trustee in bankruptcy to avoid certain "fraudulent transfers" of the debtor's property if they occurred within two years before the date of the bankruptcy filing. In Industrial Enterprises of America Inc. v. Burtis , Bankruptcy Court Judge Brendan Shannon answers the question, "May § 548's two-year 'look back' period be equitably tolled, allowing transfers that occurred outside of that window to be avoided under § 548?" The court holds that it cannot, and in the process rejects case law to the contrary not only from other jurisdictions but also from Shannon's own prior inconsistent decisions.

By Barry M. Klayman and Mark E. Felger Special to the DBCI

5 minute read