Author Archives: Andrew M Greenberg

Velo Holdings KEIP Approved by SDNY Bankruptcy Court

Posted on July 24, 2012 by Christopher J. Updike and Andrew M. Greenberg

On June 6, 2012, Bankruptcy Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved a $2.875 million key employee incentive plan (“KEIP”) in the Velo Holdings bankruptcy cases over the objection of the U.S. Trustee finding that it was primarily incentivizing and a sound exercise of the debtors’ business judgment. In re Velo Holdings Inc., Case No. 12-11384 (MG), 2012 Bankr. LEXIS 2535 (Bankr. S.D.N.Y. 2012). The decision follows well-settled law in the Southern District and Delaware regarding approval of KEIPs. Continue reading →

Posted in Analysis Tagged , , |

SDNY Bankruptcy Court Opens Door For Rule 2004 Use in Chapter 15

Posted on June 28, 2012 by Nicole M. Stephansen and Andrew M. Greenberg

On May 25, 2012, Judge Allan L. Gropper of the United States Bankruptcy Court for the Southern District of New York approved a motion to compel the production of certain documents under section 1521 of the Bankruptcy Code. In his decision, Judge Gropper also suggested that the broad discovery provisions of Bankruptcy Rule 2004 may apply to chapter 15 discovery requests, but stopped short of making such a ruling. In re Millennium Global Emerging Credit Master Fund Limited, Case No. 11-13171 (ALG), (Bankr. S.D.N.Y May 25, 2012). Continue reading →

Posted in Chapter 15

KB Toys: Delaware Bankruptcy Court Weighs in on Claims Trading

Posted on June 11, 2012 by Andrew M. Greenberg, Michele C. Maman, and Zachary H. Smith

On May 4, 2012 Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware held that a claim against a debtor’s estate, transferred to a third party, is subject to the same infirmities as in the hands of the original holder of the claim. In re KB Toys, Inc., — B.R. —-, 2012 WL 1570755, at *11 (Bankr. D. Del. 2012). Judge Carey’s opinion diverged from, and criticized, the decision of the U.S. District Court for the Southern District of New York in Enron Corp. v. Springfield Assocs., L.L.C., 379 B.R. 425 (S.D.N.Y. 2007). In that case, the court held that whether the disabilities of the original holder are inherited by a subsequent transferee turns on whether the transfer is by way of sale or assignment. Continue reading →

Posted in Claims

Not So Fast – 363 Sales May Not Be Free and Clear of Future Claims

Posted on May 11, 2012 by Douglas Mintz, Joseph Zujkowski, and Andrew M. Greenberg

In recent years, section 363 sales have increased in prominence. According to the UCLA-LoPucki Bankruptcy Research Database, less than 4 percent of all large, public company bankruptcies were resolved by sales of all or substantially all of a debtor’s assets from 1990-2000. However, in the period from 2001-2010, that figure rose to nearly 20 percent – peaking in 2008 when 32 percent of large public cases were resolved by an asset sale.[i] Purchasers like section 363 sales because, among other reasons, they purchase assets “free and clear” of all pre-bankruptcy obligations under section 363(f) of the Bankruptcy Code. However, as 363 sales increased in frequency, courts have begun to limit the free and clear nature of those sales, particularly with respect to future claims that had not arisen at the time of the sale. Continue reading →

Posted in 363 Sales

Structured Dismissals (Part II of II): Case Studies

Posted on March 2, 2012 by Zachary H. Smith, Audrey Aden Doline, and Andrew M. Greenberg

Part I of this series provided an overview of structured dismissals, and discussed how and when structured dismissals are used by chapter 11 participants. This post, the second part of the series, discusses several examples of structured dismissals from recent chapter 11 cases. The cases summarized below provide further insight into the types of cases and circumstances in which a structured dismissal may be appropriate. Although the facts and circumstances of the cases vary, all of the cases share a common theme – a structured dismissal afforded the parties in interest a more effective, efficient, and economical conclusion to the case than other potential exit strategies. Continue reading →

Posted in Plans/Confirmation

Structured Dismissals (Part I of II): Another Possible Chapter 11 Exit Strategy to Consider After a Sale of Substantially All Assets

Posted on February 9, 2012 by Zachary H. Smith, Audrey Aden Doline, and Andrew M. Greenberg

As courts and commentators alike have observed in recent years, sales of substantially all assets pursuant to section 363 of the Bankruptcy Code prior to confirmation of a chapter 11 plan have become common practice in large-scale corporate bankruptcy cases. Chapter 11 debtors who effectuate such sales traditionally must pursue one of three possible options for concluding the chapter 11 case: (i) confirmation of a plan of reorganization or liquidation, (ii) conversion of the case to a case under chapter 7 of the Bankruptcy Code, or (iii) entry of an order dismissing the case and returning all parties to their respective state law rights and remedies. However, when these courses of actions are not feasible or otherwise are simply not appropriate or practical under the circumstances, debtors are increasingly turning to structured dismissals as an alternative chapter 11 exit strategy. This blog post provides an overview of structured dismissals, and discusses how and when they are used. Part II of this series will discuss several examples of structured dismissals from recent chapter 11 cases. Continue reading →

Posted in 363 Sales, Analysis

Fourth Circuit Clarifies Position on Non-Debtor Releases

Posted on February 8, 2012 by Andrew M. Greenberg and David E. Kronenberg

On December 9, 2011, the U.S. Court of Appeals for the Fourth Circuit held that although non-debtor releases are permissible in certain contexts, the District Court for the Eastern District of Virginia erred in affirming a bankruptcy court’s order approving the National Heritage Foundation’s (“NHF”) chapter 11 plan containing non-debtor releases. Behrmann v. Nat’l Heritage Found., Inc., 663 F.3d 704, 712-13 (4th Cir. 2011). The Fourth Circuit found that the bankruptcy court had not stated facts sufficient to justify its decision approving the debtor’s plan. The Fourth Circuit refrained from adopting a particular test that must be satisfied before non-debtor releases may be approved, as other U.S. Circuit Courts of Appeal have done, instead emphasizing that Fourth Circuit bankruptcy courts should make such determinations on a case-by-case basis and explain such determinations with detailed facts. Id. Although Behrmann does not provide a test for determining whether particular non-debtor releases are permissible in the Fourth Circuit, the opinion provides some guidance as to the specificity necessary in bankruptcy court orders approving such provisions, and should be kept in mind by bankruptcy professionals preparing proposed findings of fact in support of chapter 11 plans. Continue reading →

Posted in Analysis, Plans/Confirmation Tagged |