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Third Circuit: Bankruptcy Court Can Reopen Case
The U.S. Bankruptcy Court has the authority to reopen a case without parties initiating adversary proceedings because it already has jurisdiction over debtors and the assets, the U.S. Court of Appeals for the Third Circuit has ruled in a precedential opinion. The appellate court's opinion reversed the U.S. District Court for the District of Delaware's decision vacating a U.S. Bankruptcy Court for the District of Delaware's order permitting a recreational vehicle retailer to exercise its option to purchase a land parcel because an adversary proceeding was not initiated.
Whistleblowers Crucial for White's Success as SEC Chief
President Obama's nomination of Mary Jo White to head the Securities and Exchange Commission highlights how indispensable whistleblowers can be in prosecuting securities fraud and vindicating his administration's commitment to reform.
Bankruptcy Court Holds Equitable Tolling Doesn't Apply to Look-Back Period
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.Claim Disabilities Rear Their Head in KB Toys
The market for trading bankruptcy claims is highly liquid and sophisticated, exceeding $100 billion. This market, which promotes the efficient use of capital by matching claimholders with distressed investors, plays a significant role in most large Chapter 11 cases where claims purchasers are active participants in the reorganization process.Court of Chancery Enforces Contractual Fee-Shifting Provision
A contract provision in a limited liability company agreement that entitles the prevailing party to reimbursement for all reasonable fees and costs in connection with enforcement of the agreement, including reasonable attorney fees, is not unusual. In defending against such a claim, a nonprevailing party may challenge whether the claims arose under the agreement, whether expenses incurred in related litigation in other courts merit reimbursement and whether the fees are reasonable in light of the comparable fees and rates of the nonprevailing party. Sometimes a question arises, where similar issues exist involving substantially similar contracts but different parties, of whether the court must allocate the fees among the separate parties. What is unusual is for all of these issues to be addressed in one opinion. The Court of Chancery's recent decision in ASB Allegiance Real Estate Fund v. Scion Breckenridge Managing Member , 2012 WL 3027351 (Del. Ch. July 9, 2012), does just that and provides important guidance to practitioners regarding the nature of a claim for breach of the implied covenant of good faith and fair dealing and enforcement of contractual fee-shifting provisions.Contract Precludes Litigation - Almost
Delaware law has long permitted parties to a contract to limit remedies for a breach of that contract. But many attorneys believed that no matter what the contract said, a remedy for acting in bad faith still survived and permitted a suit to enforce that remedy. That is still true, but only barely. For, as a recent Court of Chancery decision shows, even a claim for acting in bad faith may be severely limited.
Court Denies Bid to Derail $116 Mil. Sale of Morton's
The Delaware Court of Chancery has dismissed a lawsuit filed by shareholders of Morton's Restaurant Group Inc., who alleged that the steakhouse chain's directors undervalued the company when they sold it to billionaire Tilman Fertitta for $116.6 million in 2012. In dismissing the case, the court held that the directors had shopped for the best possible price and the sale was approved by a board of disinterested directors.
Fiat Wins Valuation Victory in Chancery Court
Italian car manufacturer Fiat SpA won a partial but critical victory in the Delaware Court of Chancery on Tuesday when the court ruled that it correctly interpreted that a $4.6 billion promissory note issued by Chrysler, a company in which Fiat owns a 41.5 percent stake, should be counted as debt. However, the court held that more discovery was needed to resolve other matters such as the final determination on price of shares issued to a health care trust that Fiat sought to acquire.Serial Bankruptcy Filings Keep Creditors at Bay but Tie Up Judicial Resources
By Kevin G. CollinsChancery Court Allows Evidence in Appraisal Trial of Mandatory Redemption
When a dissatisfied stockholder petitions the Court of Chancery for an appraisal of shares extinguished in a merger, the petitioner will have the burden of persuading the court of the fair value of those shares. When the holder owns preferred stock, valuation issues arise that do not pertain to the holders of common stock. That is because, unlike for common stockholders, preferred stockholders' rights, including to redemption and sometimes to valuation in the event of a merger, are spelled out contractually.Trending Stories
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