Appleseed’s Intermediate Holdings, Inc. a/k/a Orchard Brands and 27 affiliates[1] (the “Debtors” or “Orchard Brands”) filed for relief under Chapter 11 of the Bankruptcy Code on January 19, 2011 (Bankruptcy Court for the District of Delaware, Case No.11-10160). The case has been assigned to the Honorable Kevin Gross. This note briefly looks at the Debors’ business, discusses the trade debt picture and provides the list of the Debtors’ 50 largest unsecured creditors.
Checker Motors Corporation Creditors Committee to Jump Start Bankruptcy Preference Recovery
On December 29, 2010, with only 2 weeks left before expiration of the statute of limitations for bringing preference actions, the Creditors Committee in the Checker Motors Corporation bankruptcy (Bankruptcy Court for the Western District of Michigan Case No.: 09-00358) moved for authority to file preferential transfer recovery actions (the “Standing Motion”) in anticipation of the approval of the proposed Plan of Liquidation. The Plan of Liquidation contemplates that all remaining assets of the Debtor, including avoidance actions under Chapter 5 of the Bankruptcy Code, will be assigned to a Liquidating Trust. With no filed opposition to the creditors committee’s motion, there is no reason to expect that the requested authority will not be granted.
Lyondell Chemical Company Litigation Trust Starts Bankruptcy Preference Recoveries
The Lyondell Chemical Company and its 93 associated debtors’ (the “Debtors”) bankruptcy preference claims were transferred to the LB Litigation Trust when the LyondellBasell Third Amended and Restated Joint Chapter 11 Plan of Reorganization became effective on April 30, 2010. The plaintiff in the actions is Edward S. Weisfelner, as Trustee of the trust. Although starting slowly with the filing of only 39 preference actions from December 7, 2010 to December 17, 2010, the LB Litigation trust has the strong potential to launch a massive preferential transfer recovery effort.
Great Atlantic & Pacific Tea Co. (A&P) Bankruptcy – 40 Largest Unsecured Creditors; Trade Debt Picture
Great Atlantic & Pacific Tea Co. and 53 affiliates[1] (the “Debtors” or “A&P”) filed for relief under Chapter 11 of the Bankruptcy Code on December 12, 2010 (Bankruptcy Court for the Southern District of New York, White Plains Division, Case No. 10-24549). The case has been assigned to the Honorable Robert D. Drain. This note briefly discusses the trade debt picture, identifies the first day motions directly affecting unsecured creditors, and provides the list of the Debtors’ 40 largest unsecured creditors.
PPI Holdings, Inc. (MPI International) Mass Bankruptcy Preference Recovery Filings Signal Start of Tsunami of Preference Actions in Automotive Supply Sector
On December 9 and 10 , 2010, the Official Committee of Unsecured Creditors of PPI Holdings, Inc. and 7 associated debtors (the “Debtors”) started its bankruptcy preference recovery efforts with by filing 182 complaints. The PPI Holdings preference actions are the leading edge of a tsunami of avoidable transfer recovery actions that are going to hit the automotive sector as the legacy from the Section 363 sales that dominated the sector bankruptcies in 2009.
Madoff Trustee Files Hundreds of Avoidable Transfer Recovery Proceedings against Former Madoff Clients
The long anticipated avoidable transfer recovery proceedings against former clients of Bernard L. Madoff commenced being filed on November 26, 2010 and by December 4, 2010, the total number of complaints filed reached 887 (update April 05, 2011 – a total of 1057 avoidance actions were filed after November 26, 2010). The complaints were filed by Irving H. Picard, as trustee (the “Trustee”) in the substantively consolidated proceeding brought under the Securities Investor Protection Act (“SIPA”) for the liquidation of the business of Bernard L. Madoff Investment Securities LLC and the bankruptcy estate of Bernard L. Madoff , individually (collectively “Madoff”). The statutory grounds for the avoidance actions include Sections 547- Preferences and 548 – Fraudulent Transfers – under the Bankruptcy Code. This note provides a cursory overview of the avoidance actions.
Tribune Company Creditors Committee Brings Mass “Insider” Preferential Transfer Recovery Actions
On October 3rd and 4th, 2010, the Official Committee of Unsecured Creditors of Tribune Company (the “Committee”, on behalf of Tribune Company, et al. (the “Debtors”) brought 209 adversary proceedings for the recovery of preferential transfers. Of these 209 complaints, all appeared to name individuals as the defendants. The primary theory of recovery is avoidance of preferential transfers to an “insider”, which designation under Section 547 of the Bankruptcy Code allows the Committee to seek avoidance of transfers made during a 1 year period prior to the bankruptcy petition filing. The amount and basis for each transfer is identified on Exhibit A to each complaint. The identified transfer bases include: “Restricted Stock Units”, “Executive Transition”, “Deferred Bonus”, “Excise Tax Gross Up” and “Phantom Equity”.
Circuit City Stores Bankruptcy Court – Transfer to Satisfy 503(b)(9) Claim Negates New Value
Eastern District of Virginia Bankruptcy Judge Kevin R. Huennekens, in a December 1, 2010 opinion in Circuit City Stores, Inc. v. Mitsubishi Digital Electronics America, Inc. (AP No. 10-03068), held that the preference claim defendant could not utilize a new value defense (Section 547(c)(4) defense) if the defendant receives a transfer for its § 503(b)(9) administrative claim predicated upon the same instance of new value. In reaching the conclusion, the Court methodically and with remarkable precision parses through the complexities of Section 547(c)(4). Given the Court’s reasoning, the next question is “What about payments post petition under critical vendor, warehouseman, carrier and wage motions.”
Circuit City Stores Bankruptcy – Liquidation Trustee Files 565 Bankruptcy Preference Actions
Alfred H. Siegel, as Trustee of the Circuit City Stores, Inc. Liquidating Trust filed 565 adversary proceedings for the recovery of bankruptcy preferences between November 5 and November 10, 2010 in the Bankruptcy Court for the Eastern District of Virginia. The complaints are unremarkable with one notable exception. The complaints include the following:
Plaintiff acknowledges that some of the Preferential Transfers might be subject to defenses under Bankruptcy Code section 547(c), for which the Defendant bears the burden of proof under Section 547(g). Plaintiff will work with Defendant to exchange applicable information in an effort to resolve any and all factual issues with respect to potential defenses.
Below is a summary of the adversary proceedings. An adversary proceeding report (APScan) of the adversary proceedings can be reviewed by clicking this link.
Iowa Corn Farmers Turn Back VeraSun Energy Corporation’s Threatened Bankruptcy Preference Actions
With the passage on October 31, 2010 of the 2 year statute of limitations, Iowa’s corn farmers have definitively rebuffed a threatened onslaught of preferential transfer avoidance actions by VeraSun Energy Corporation. The 198 defendants who were named in the VeraSun preference actions only can envy the result of the tenacity and resourcefulness of these Iowa farmers. And more than a few small business owners should eat an extra helping of corn at Thanksgiving in thanks for the corn farmers undoubted influence on VeraSun’s decision to set a $20,000 floor for bringing preference actions. The story behind the success of the Iowa Corn Farmers has an important lesson.