On November 9, 2010, Richard D. Caruso, as Litigation Trustee of the Crucible Materials Corporation Creditors Litigation Trust, started the recovery of preferential transfers under Section 547 of the Bankruptcy Code. The adversary proceeding report on the Crucible Materials Corporation preference actions can be viewed by clicking this link. The following is a summary of the proceedings.
DBSI Inc. Bankruptcy Trustee Launches 853 Avoidance Actions Against Investors, Trade Creditors
From November 1, 2010 through November 10, 2010, the Chapter 11 Trustee in the DBSI Inc. bankruptcy has launched 853 avoidance actions against investors and trade creditors. The avoidance actions are unique for several reasons.
Consolidated Bedding, Inc. Chapter 7 Trustee Files 83 Bankruptcy Preference Actions
Alfred T. Giuliano, Chapter 7 Trustee for the Bankruptcy Estates of Consolidated Bedding, Inc., et al. has filed 83 actions for the recovery of preferential transfers under Section 547 of the Bankruptcy Code. The initial adversary proceeding report on these preference actions can be viewed by clicking this link. The following is a summary of the proceedings.
Nortel Networks Starts Bankruptcy Preference Recovery Adversary Proceedings
Nortel Networks (CALA) Inc. and certain of its affiliated debtors, as debtors in possession, have commenced filing of adversary proceeding complaints for recovery of preferential transfers under section 547 of the Bankruptcy Code (bankruptcy preferences). On October 4, 2010, the initial round of 23 complaints were filed. A summary of the bankruptcy preference recovery actions is provided below.
Blockbuster Video Bankruptcy – 50 Largest Unsecured Creditors; Is Inclusion of the Movie Studios a Dream Sequence
Blockbuster, Inc. and 12 affiliates (the “Debtors”) filed for relief under Chapter 11 of the Bankruptcy Code on September 23, 2010 (Bankruptcy Court for the Southern District of New York, Manhattan Division, Case No. 10-14997). The Debtors have requested authority to file a consolidated list of the 50 largest unsecured creditors in lieu of a separate list for each of the Debtors. The consolidated list is set forth below.
Brunos Supermarkets, LLC Potential for Massive Bankruptcy Preference Actions within Next 4 Months
With scarcely 4 months remaining on the statute of limitations for bringing Section 547 bankruptcy preference actions (it expires on February 5, 2011), the bankruptcy case of Brunos Supermarkets, LLC has moved on to the bankruptcy preference watch list.
Quebecor World Litigation Trust Requests Entry of Defaults in 269 (15%) of the Bankruptcy Preference Actions
On September 13, 2010, Eugene I. Davis, as Litigation Trustee for the Quebecor World Litigation Trust, filed affidavits and requests for entry of defaults in 269 bankruptcy preference actions. According to the affidavits, the defendants in these adversary proceedings simply failed to answer. This note briefly discusses the number of defaulting defendants, the size of the defaulted claim amounts and the impact of Section 502(d), which will preclude distributions on the prepetition unsecured claims of each of the defaulting defendant until the judgment is paid.
DPH Holdings Corp. (fka Delphi Corporation) Moves to Amend 130 Bankruptcy Preference Actions – Does the Presumption of Insolvency Trump Ashcroft v. Iqbal’s Mandate for Pleading Facts from which Insolvency Can be Found? Does Delphi Have the Insolvency Facts to Plead?
On July 22, 2010, Southern District of New York Bankruptcy Judge Robert Drain gave counsel for the Delphi reorganized debtors (the “Debtors”) an ultimatum – convince him that the debtors should be allowed to amend 130 preference-action complaints or those complaints will be dismissed on Rule 12(b)(6) grounds. The ”new” complaints, offered up on September 7, 2010, rely on factually threadbare conclusory statements of Delphi’s insolvency during the preference period. The Debtors’ collective prayer for relief can be paraphrased as: “Please let the Section 547(f) presumption of insolvency suffice for pleading factual grounds for insolvency!”
Ply-Marts: The Not-Good, the Bad and the Ugly Sides of Involuntary Bankruptcy
The 2008 Ply-Marts’ bankruptcy case (ND Ga. Case #08-72687) provides a poster-child picture of how trade creditors can lose when an involuntary bankruptcy petition is filed against a financially-strapped customer. In addition to the recovery of pre-petition preferential transfers under Section 547 of the Bankruptcy Code, many of the 45 adversary proceedings filed by the Chapter 7 trustee between August 16 and August 30, 2010, are introducing the defendants to the rights of a trustee to seek recovery under Section 549 on account of payments made to a creditor after an involuntary petition is filed and before the bankruptcy judge orders the commencement of the bankruptcy.
Creditors Brace for Preference Claims in Hard Rock Park (HRP) of Myrtle Beach Bankruptcy
The demise of Hard Rock Theme Park in Myrtle Beach, S.C. was a stunning disappointment. After two years of construction and a lavish opening in June, 2008, the $400 million entertainment complex – boasting the ability to entertain 30,000 visitors a day — closed its doors and opted for bankruptcy court less than four months later. In re HRP Myrtle Beach Holdings, LLC, Administratively Consolidated in Case No. 08-12193 in the United States Bankruptcy Court for the District of Delaware.