On February 1, 2011, Sltn Trst, LLC, solely in its capacity as Creditor Trustee of the (1) Babystyle Creditor Trust; and (2) Right Start Creditor Trust in the Right Start Acquisition Company and Babystyle, Inc. Bankruptcy, commenced Chapter 5 preferential transfer recovery litigation with the filing of 48 complaints in the United States Bankruptcy Court for the Central District Of California (San Fernando Valley).
Borders Group – 30 Largest Unsecured Creditors
Borders Group, Inc. and 7 associated debtors (the “Debtors” or “Borders”) filed voluntary petitions under Chapter 11 of the Bankruptcy Code on February 16, 2011 in the Bankruptcy Court for the Southern District of New York (Case No. 11-10614). The Honorable Martin Glenn has been assigned to the case. This initial note provides the Debtors’ consolidated list of their 30 largest unsecured creditors. See related list Borders’ top 50 recipients of payments in the 90 days prior to the Borders’ bankruptcy or read the complete Borders preference analysis by going here: For 1786 Borders’ Suppliers and Other Creditors, Its Not Time to Close the Books.
Liquidating Trustee of the BearingPoint, Inc. Finishes Filings with Two Large Ones
On February 14, 2011, John DeGroote Services, LLC, in its capacity as Liquidating Trustee of the BearingPoint, Inc. Liquidating Trust finished up its bankruptcy preference complaints with a $21 million avoidance complaint against American Express Travel Related Services Company and a $10 million avoidance complaint against Ernst & Young, LLP.
Metaldyne Corporation (n/k/a Oldco M Corporation) Distribution Trustee Prepares Massive Bankruptcy Preference Recovery Campaign
The trustee of the distribution trust for Metaldyne Corporation n/k/a Oldco M Corporation (Bankruptcy Court Southern District of New York) has sent out over 500 demand letters for recovery of bankruptcy preferences. With the statute of limitations for bringing of preference actions expiring on May 27, 2011, the negotiation stage of the claim resolution process will be intensifying. The trustee, Executive Sounding Board Associates Inc. (the “Trustee”) has reported that, as of mid January, the Trustee had collected over $391,000 in preference recoveries and reduced the unsecured creditor class by over $1.38 million. Duane Morris LLP (New York, New York) has been retained to prosecute avoidance actions. Larry J. Kotler is lead attorney for Duane Morris in the bankruptcy preference recovery campaign. Pryor Cashman, LLP has been retained to prosecute avoidance actions as to which Duane Morris has a conflict.
Ultimate Electronics Moves to Liquidate all Stores; Preference Claims Likely
On February 4, 2010, Ultimate Acquisition Partners, LP d/b/a Ultimate Electronics (Delaware Case No. 11-10245) filed a motion seeking authority to engage in liquidating sales of its 46 stores. While not of the size of the Circuit City bankruptcy, the progression of the two bankruptcies is similar. The Circuit City bankruptcy is now in the midst of massive bankruptcy preference litigation. There is no reason to believe that Ultimate Electronics will not end up in the same place. In fact, the Ultimate Electronics bankruptcy looks far worse for the potential bankruptcy preference defendants. The filings made by Ultimate Electronics to date are replete with references to difficulties the debtor was having with suppliers – a bad flag for the availability of the ordinary course of business defense. For these reasons, Ultimate Electronics has been put on our bankruptcy preference watch list, even though the statute of limitations will not expire until January 26, 2013.
S&K Famous Brands, Inc. Liquidating Trust Starts Bankruptcy Preference Adversary Proceedings
On February 2, 2011, S&K Famous Brands, Inc. Liquidating Trust in the S&K Famous Brands, Inc. Bankruptcy, commenced Chapter 5 preferential transfer recovery litigation with the filing of 25 as of February 2, 2011 complaints in the United States Bankruptcy Court for the Eastern District of Virginia (Richmond).
Southwest Georgia Ethanol Bankruptcy – Background, Largest Trade Creditors
Southwest Georgia Ethanol, LLC (the “Debtor” or “SWGE”) filed a Voluntary Petition under Chapter 11 of the Bankruptcy Code on February 1, 2011 in the Bankruptcy Court for the Middle District of Georgia (Albany Division, transfer request to Macon Division pending) (Case No. 11-10145). The Honorable Judge James D. Walker Jr. has been assigned to the case. With this filing, another ethanol producer seeks bankruptcy protection, going the way of Verasun Energy Corporation and Pacific Energ2y Resources Ltd. Suppliers and trade creditors should hope this bankruptcy has a happier ending. Both Verasun Energy Corporation and Pacific Energy Resources Ltd. are now in the midst of mass bankruptcy preference litigation (although the Iowa corn farmers were able to escape the claims in the Verasun Energy Corporation bankruptcy).
Chapter 7 Trustee for the estate of WL Homes, LLC. Starts Bankruptcy Preference Litigation
On January 31, 2011, George L. Miller, Chapter 7, Trustee for the estate of WL Homes, LLC., et al. in the WL Homes LLC Bankruptcy, commenced his bankruptcy preference recovery litigation with the filing of 94 preference complaints. The Trustee has taken care to plead the elements of his bankruptcy preference claim in accord with the hightened pleading standards of Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009). In particular, the Trustee includes specific factual allegations supporting its claims of the Debtors’ insolvency during the preference period.
Noble International Ltd Liquidating Trustee Files Expansive Avoidance Actions Against Suppliers under Section 547, 548, 549 and 553
From January 19, 2011 through January 25, 2011, the liquidating trustee for Noble International Ltd. and 14 affiliates (the “Noble International”) filed 173 avoidance actions under Chapter 5 of the Bankruptcy Code in the Bankruptcy Court for the Eastern District of Michigan (Detroit Division). The filing of bankruptcy preference actions is no surprise (see our January 9, 2010 report of 2009 Automotive Supplier Bankruptcies). As part of its Plan of Liquidation, Noble International had estimated recovery of $3.85 million through avoidance actions. The complaints, however, are remarkable.
Contech U.S., LLC Bankruptcy Trustee Prepares 200 Bankruptcy Preference Complaints
On January 24, 2011, a hearing will be held in the Contech U.S., LLC (“Contech”) bankruptcy (Eastern District of Michigan, Southern Division ) on the Chapter 7 Trustee’s Motion for an Order Establishing Uniform Procedures and Deadlines for Certain Adversary Proceedings (the “Procedures Motion”). The Chapter 7 Trustee, Gene R. Kohut, has advised the Bankruptcy Court that the he will be filing as many as 200 bankruptcy preference complaints on or before January 30, 2011. The time frames set out in the procedure motions convey the clear message that a substantial effort will be made to settle as many of the preference actions as quickly and as efficiently as possible.