Articles tagged with: substantive consolidation

Delaware Bankruptcy Judge Walsh Rejects Substantive Consolidation Retroactivity by Implication

District of Delaware, United States Bankruptcy Judge Peter J. Walsh issues his opinion in Giuliano v. Shorenstein Company LLC (In re Sunset Aviation, Inc. ), Adv. Proc. No. 11-50965 (Bankr. D. Del.  September 7, 2011)   holding that an order for substantive consolidation is not retroactively effective when it fails to expressly provide that it is nunc pro tunc.  Based on this holding, Judge Walsh dismisses, with prejudice, the bankruptcy preference count of the complaint by Alfred T. Giuliano, Chapter 7 Trustee for the Bankruptcy Estates of Sunset Aviation (the “Trustee”). Fundamentally, Judge Walsh rejected the Trustee’s urging for the Court to perfunctorily use a substantive consolidation order to rewrite Section 547 of the Bankruptcy Code.

Sunset Aviation, Inc. Bankruptcy: Shorenstein Company LLC’s Reply in Support of Motion to Dismiss with Prejudice

07/27/2011 – Defendant’s Reply in Further Support of Its Motion to Dismiss with Prejudice filed in the Sunset Aviation, Inc. Adversary Proceedings by Shorenstein Company LLC before Judge Walsh in the District of Delaware filed by  Cross & Simon LLC (Wilmington, Delaware) attorney Michael J. Joyce; and Morrison & Foerster LLP (New York, New York) attorneys Melissa A. Hager John A. Pintarelli. Defendant Shorenstein Company LLC’s reply takes apart every aspect of the Chapter 7 Trustee’s position that substantive consolidation order shifted the date for calculating the preference period to the earliest debtor petition date. However, what makes this reply especially noteworthy is (1) its retort to the Trustee’s “equity of creditors” rhetoric; (2) its discussion of the Third Circuit’s approach to substantive consolidation; and (3) its argument that, if the Court is inclined to give nunc pro tunc effect, it should be to the petition date of the last filing debtor.

Chapter 7 Trustee for the Bankruptcy Estates of Sunset Aviation, Inc., et al. Starts Preference Adversary Proceedings

On February 24, 2011, Alfred T. Giuliano, Chapter 7 Trustee for the Bankruptcy Estates of Sunset Aviation, Inc., et al. commenced Chapter 5 preferential transfer recovery litigation with the filing of 200 complaints in the United States Bankruptcy Court for the District of Delaware.   By order entered on August 19, 2010 the estates of Regal Jets, LLC, Sunset Aviation, Inc, and JetDirect Aviation, Inc. were substantively consolidated.  Each of the 3 debtors filed its respective bankruptcy petition on different dates, with the third filing occurring more than 60 days after the first filing.  The Trustee seeks to use the same petition date for all three debtors, but the substantive consolidation order does not provide for retroactive consolidation – i.e. it is not nun pro tunc.  The question:  Will the retroactive petition dates still fly?