LexisNexis® Legal Newsroom
    Split 8th Circuit Upholds Damages Award To Debtor Couple; Stay Violated

    ST. LOUIS - A split panel of the Eighth Circuit U.S. Court of Appeals on June 27 upheld a sanctions award for a debtor couple who contended that a company that bid on their house at auction had violated the automatic stay in moving for the auction in the first place (Richard P. Garden v. Central Nebraska Housing Corp., No. 12-2344, Chapter 7, 8th Cir.; 2013 U.S. App. LEXIS 13200).

    Ponzi Scheme Victims' Motion To Compel In Rothstein Case 'Prejudicial,' Bank Says

    FORT LAUDERDALE, Fla. - TD Bank NA, a creditor in the Chapter 11 bankruptcy of law firm Rothstein Rosenfeldt Adler (RRA), on June 27 moved in bankruptcy court for an order that would deny a motion to compel filed by other creditors that were victims of the Ponzi scheme run by Scott Rothstein, on grounds the bank should not be forced to answer the interrogatories posed by the Ponzi scheme victims (In Re: Rothstein Rosenfeldt Adler, No. 09-34791, Chapter 11, S.D. Fla. Bkcy.).

    Bankruptcy Judge: Deal Makes Reorganization Plan Possible For Residential Capital

    NEW YORK - The federal bankruptcy judge presiding over the Chapter 11 proceeding of Residential Capital LLC (ResCap) on June 27 approved a plan supplement agreement (PSA) without which he said the case would "return to square one" (In Re: Residential Capital LLC, No. 12-12020, Chapter 11, S.D. N.Y. Bkcy.).

    Federal Regulators: Corzine Misused Funds, 'Responsible' For MF Global's Collapse

    NEW YORK - The U.S. Commodities Futures Trading Commission (CFTC) on June 27 filed a civil complaint in the U.S. District Court for the Southern District of New York alleging that Jon S. Corzine, as CEO of bankrupt MF Global Holdings Ltd. (MFGH), is legally responsible for MFGH's misuse of $952 million in customer money that was invested with the firm. The complaint also names MFGH's assistant treasurer Edith O'Brien as a defendant (U.S. Commodities Futures Trading Commission v. MF Global Inc., et al., No. 13-4463, S.D. N.Y.).

    State Of Michigan: THQ Plan Of Liquidation Violates Tax Law, Should Be Denied

    WILMINGTON, Del. - The Department of the Treasury for the State of Michigan (DOT) on June 27 filed a brief in the bankruptcy of video game maker THQ Inc., arguing that its plan of liquidation violates the federal Tax Injunction Act, 28 U.S. Code Section 1341, and therefore should be denied (In Re: THQ Inc., No. 12-13398, Chapter 11, D. Del. Bkcy.).

    Claim Against Dewey & LeBoeuf For More Than $7.89M Is Proper, U.S. Bank Says

    NEW YORK - U.S. Bank National Association, a creditor in the Chapter 11 bankruptcy of law firm Dewey & LeBoeuf, on June 27 filed a brief objecting to the firm's motion to disallow in its entirety the bank's claim for more than $7.89 million, arguing that the amount it seeks is supported by the agreement the two parties signed prior to the firm's bankruptcy filing (In Re: Dewey & LeBoeuf, No. 12-12321, Chapter 11, S.D. N.Y. Bkcy.).

    Judge: Allegations By Claims Center Members Against Fellow Member Barred

    NEWARK, N.J. - Three former producers of asbestos products are contractually barred from pursuing breach of contract claims against fellow asbestos producer G-I Holdings Inc. in G-I's Chapter 11 case, a New Jersey federal judge held June 26 in affirming a bankruptcy judge's award of summary judgment to G-I on the claims (In re: G-I Holdings, Inc., et al., Nos. 01-30135 and 01-38790, D. N.J. Bkcy. $(United States Gypsum Company, et al. v. G-I Holdings, Inc., No. 2:12-cv-06933, D. N.J.$)).

    Asbestos Claimants Accuse United Gilsonite Of Fraudulent Conveyance

    WILKES-BARRE, Pa. - Asbestos claimants in the Chapter 11 case of United Gilsonite Laboratories (UGL) on June 24 sought permission from a Pennsylvania federal bankruptcy court to pursue fraudulent conveyance and breach of fiduciary duty claims against the family-owned company's officer as part of the claimants' plan of reorganization for UGL that includes selling the business (In re: United Gilsonite Laboratories, 11-2032, M.D. Pa. Bkcy.).

    Bankruptcy Judge Approves $2B Japanese Yen Reorganization Plan For Elpida Memory

    WILMINGTON, Del. - The federal bankruptcy judge presiding over the Chapter 15 proceeding of Elpida Memory Inc. on June 25 approved Micron Technology Inc.'s 200 billion yen Japanese reorganization plan, which will give Micron control of all of Elpida's U.S. assets (In Re: Elpida Memory Inc., No. 12-10947, Chapter 15, D. Del. Bkcy.).

    11th Circuit Affirms Bad Faith Ruling For Debtor Who Filed To Avoid Paying Debt

    ATLANTA - A panel of the 11th Circuit U.S. Court of Appeals on June 26 affirmed a bankruptcy court's ruling and held that a debtor who filed his bankruptcy to avoid paying a state court judgment against him had filed his petition in bad faith (Craig Piazza v. Nueterra Healthcare Physical Therapy LLC $(In Re: Craig Piazza$), No. 12-12899, Chapter 7, 11th Cir.; 2013 U.S. App. LEXIS 13072).

    7th Circuit Reverses; Debtor Company Entitled To Damages From Employee's Breach

    CHICAGO - A divided panel of the Seventh Circuit U.S. Court of Appeals on June 26 reversed and remanded a district court ruling and a bankruptcy court ruling and held that a company aided and abetted an employee of a bankrupt company in breaching his fiduciary duty; therefore, the bankrupt company was entitled to damages (Pro-Pac Inc v. WOW Logistics Company, No. 12-2976, Chapter 11, 7th Cir.; 2013 U.S. App. LEXIS 13052).

    Agency Making Payments For MFGH Defense Costs Says Cap Increase Needed

    NEW YORK - The MF Global Assurance Co. Ltd. (MFGA), the authorized agency for making insurance payments for the defense costs of officers of bankrupt MF Global Holdings Ltd. (MFGH), on June 25 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York arguing that the Bankruptcy Court should lift the automatic stay to allow a $10 million increase in the cap amount that governs how much MFGA is permitted to pay (In Re: MF Global Holdings Ltd., No. 11-15059, Chapter 11, S.D. N.Y. Bkcy. and In Re: MF Global Inc., No 11-2790, Chapter 11, S.D. N.Y. Bkcy.).

    Kodak Says Rights Offering, With Additional $8M For Creditors, Is 'Reasonable'

    NEW YORK - Bankrupt Eastman Kodak Co. on June 25 filed a brief arguing that a bankruptcy court should authorize it to conduct a rights offering in conjunction with its first amended Chapter 11 plan of reorganization because the company has made an additional $8 million available to creditors, which is "reasonable" (In Re: Eastman Kodak Company, No. 12-10202, Chapter 11, S.D. N.Y. Bkcy.).

    9th Circuit: Contractor May Collect Interest; Bankruptcy Estate Not Affected

    SAN FRANCISCO - A panel of the Ninth Circuit U.S. Court of Appeals on June 21 ruled that a subcontractor was entitled to post-petition interest on a judgment it was awarded against the U.S. Department of Energy (DOE) despite the fact that the DOE is a creditor in the bankruptcy of another contractor, finding that the award did not jeopardize the ability of creditors to collect on their claims against the bankruptcy estate (Ground Improvement Techniques Inc v. The Plan Committee $(In The Matter Of: Washington Group International Inc.$), No. 11-17447, Chapter 11, 9th Cir.; 2013 U.S. App. LEXIS 12772).

    Creditors In 'Pink Slime' Case Say $1.65M Deal With WARN Class Lacks Legal Basis

    WILMINGTON, Del. - A group of creditors in the Chapter 11 bankruptcy of AFA Investments Inc., the maker of the "pink slime" beef additive, on June 24 filed a brief objecting to a global settlement AFA is proposing on the grounds that the company lacks legal basis for paying $1.65 million to members of a class that has sued it in separate litigation under the Worker Adjustment and Retraining Notification (WARN) Act (In Re: AFA Investment Inc., No. 12-11127, Chapter 11, D. Del. Bkcy.).

    Pfizer Faces Asbestos Actions After Supreme Court Declines To Hear Case

    WASHINGTON, D.C. - The U.S. Supreme Court on June 24 denied a bid for certiorari by Pfizer Inc. of a ruling removing the protection for Pfizer of a bankruptcy injunction barring asbestos personal injury claims entered in the case of a defunct Pfizer subsidiary (Pfizer Inc. v. Law Offices of Peter G. Angelos, No. 12-300, U.S. Sup.).

    Revstone Creditor Says Sale Of Assets 'Improper' And 'Not Ripe For Adjudication'

    WILMINGTON, Del. - A creditor of bankrupt Revstone Industries LLC on June 21 filed a brief in bankruptcy court objecting to Revstone's motion seeking approval to sell the assets of its subsidiary Contech Castings LLC on grounds that the assets are not part of the bankruptcy estate and the issue is "not ripe for adjudication" (In Re: Revstone Industries LLC, No. 12-13262, Chapter 11, D. Del. Bkcy.).

    7th Circuit Dismisses $17M Malpractice Claim Related To Company's Bankruptcy

    CHICAGO - A panel of the Seventh Circuit U.S. Court of Appeals on June 21 affirmed the dismissal of a $17 million legal malpractice case against law firm Mayer Brown Rowe & Maw related to the advice it gave a company in bankruptcy (David E. Grochocinski v. Mayer Brown Rowe & Maw, No. 10-2057, Chapter 7, 7th Cir.; 2013 U.S. App. LEXIS 12728).

    U.S. Supreme Court To Rule On Bankruptcy Judges' Power In 'Core' Proceedings

    WASHINGTON, D.C. - The U.S. Supreme Court on June 24 granted certiorari in a case dealing with the questions of whether Article III of the U.S. Constitution permits the exercise of the judicial power of the United States by bankruptcy courts on the basis of litigant consent and whether a bankruptcy court may submit proposed findings of fact and conclusions of law for de novo review by a district court in a "core" proceeding under 28 U.S. Code Section 157(b) (Executive Benefits Insurance Agency v. Arkinson, No. 12-1200, U.S. Sup.).

    Rothstein Trustee: Creditors 'Misrepresent' Agreement, Wrongly Oppose Plan

    FORT LAUDERDALE, Fla. - The trustee in the Chapter 11 bankruptcy proceeding of Rothstein, Rosenfeldt Adler (RRA), the former law firm of convicted Ponzi scheme operator Scott Rothstein, on June 21 filed a brief in bankruptcy court arguing that certain creditors known as the Levy parties "misrepresent" terms of a settlement they had with the trustee and wrongfully oppose the RRA plan of liquidation (In Re: Rothstein Rosenfeldt Adler, No. 09-34791, Chapter 11, S.D. Fla. Bkcy.).

    N.J. Supreme Court: Asbestos Claims Are Not Covered Under Insolvent Insurer's Policies

    TRENTON, N.J. - Asbestos claims against a bankrupt insured manufacturer are not covered under excess comprehensive general liability insurance policies issued by its insolvent insurer, the New Jersey Supreme Court held June 19, finding that the doctrine of collateral estoppel applies (In the matter of the liquidation of Integrity Insurance Co./The Celotex Asbestos Trust, No. 068970, N.J. Sup.; 2013 N.J. LEXIS 588).

    2nd Circuit: Debtor Failed To Properly Appeal Ruling; Jurisdiction Lacking

    NEW YORK - A panel of the Second Circuit U.S. Court of Appeals on June 20 ruled that it lacked jurisdiction to hear a debtor's appeal of a nondischargeability ruling in her Chapter 7 bankruptcy proceeding because she failed to properly appeal the bankruptcy court's decision (Gail K. Bugnacki v. Caroll M. Rzasa $(In Re: Gail K. Bugnacki$), No. 12-2490, Chapter 7, 2nd Cir.; 2013 U.S. App. LEXIS 12633).

    Bankruptcy Judge OKs $3M Deal To Settle K-V Discovery Overpricing Claims

    NEW YORK - The federal bankruptcy judge presiding over the Chapter 11 proceeding of pharmaceutical company K-V Discovery Solutions Inc. on June 20 granted a motion by bankrupt K-V and approved a $3 million settlement between the company and the State of Texas pertaining to alleged overpricing of medication (In Re: K-V Discovery Solutions Inc., No. 12-13346, Chapter 11, S.D. N.Y. Bkcy.).

    Asbestos Coverage Disputes Between Flintkote, Insurers Go To Binding Arbitration

    WILMINGTON, Del. - A Delaware federal bankruptcy judge on June 20 granted relief from the automatic stay in The Flintkote Co.'s Chapter 11 case so that Flintkote and certain London market insurance companies can participate in binding arbitration to resolve disputes over insurance coverage for asbestos bodily injury claims (In re: The Flintkote Co., et al., No. 04-11300, D. Del. Bkcy.).

    Bankrupt Residential Capital: $200M In Claims Should Be Dismissed Or Expunged

    NEW YORK - Bankrupt Residential Capital (ResCap) on June 20 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York arguing that the $200 million in claims filed by the National Credit Union Administration (NCUA) should be dismissed or disallowed (In Re: Residential Capital LLC, No. 12-12020, Chapter 11, S.D. N.Y. Bkcy.).