Monthly Archives: November 2011

Delaware Bankruptcy Court Considers Scope of Section 505(a) of the Bankruptcy Code

Securing a determination of a debtor’s tax liability is an issue that frequently vexes debtors in possession and trustees during the reorganization process. While section 505(a) of the Bankruptcy Code authorizes, with apparent clarity, bankruptcy courts to, inter alia, “determine the amount or legality of any tax,” taxing authorities often oppose motions for relief under section 505(a) and challenge bankruptcy courts’ jurisdiction to hear such motions.[i] Such was the case in a recent decision rendered by the Bankruptcy Court for the District of Delaware. Continue reading

The Unclear Status of Stakeholder Negotiations in a Post-WaMu World

Among the several issues addressed in the September 13th opinion of the United States Bankruptcy Court for the District of Delaware in In re Washington Mutual, Inc., the distressed investment and restructuring community has been focused on the holding that the participation of certain noteholders (the “Settlement Noteholders”) in plan-related settlement negotiations and subsequent trading activity gave rise to colorable claims that could be asserted against them. This ruling has cast uncertainty upon creditors’ ability to play a constructive role in achieving successful reorganization outcomes by way of consensual agreement. In light of the essential policy interest favoring settlements over protracted litigation, the framework set forth in WaMu may have the regrettable effect of chilling creditor participation in negotiations that would otherwise serve to benefit all stakeholders. Continue reading

Bankruptcy Bullets – In re Yellowstone Mountain Club, LLC, No. 08-61570-11, 2011 WL 4625381 (Bankr. D. Mont. Sept. 30, 2011)

On September 30, 2011, the U.S. Bankruptcy Court for the District of Montana held, on remand, that (i) a global settlement initially approved on June 9, 2009 was subject to proper notice, proposed in good faith, and fair and equitable, … Continue reading