LexisNexis® Legal Newsroom
Bankruptcy Judge To Reconsider $33.5M Funding Ruling For Bankrupt Allied Systems

WILMINGTON, Del. - The federal bankruptcy judge presiding over the Chapter 11 bankruptcy of Allied Systems Holdings Inc. on July 2 granted a motion to reconsider the ruling that approved replacement debtor-in-possession (DIP) financing of $33.5 million. Lenders had argued that Allied failed to provide adequate protection for the holders of first- and second-lien post-petition debt (In Re: Allied Systems Holdings Inc., No. 12-11564, Chapter 11, D. Del. Bkcy.).

9th Circuit: Creditors May Challenge Dischargeability Because Of Firm Deadline

SAN FRANCISCO - A panel of the Ninth Circuit U.S. Court of Appeals on July 2 ruled that the former employees of a company that went bankrupt could not challenge the dischargeability of certain debts, even though they may have involved fraud, because federal bankruptcy rules do not permit late filings for such challenges (Amina Anwar, et al. v. D. Lee Johnson, et al., No. 11-16612, Chapter 7, 9th Cir.; 2013 U.S. App. LEXIS 13492).

Casa Casuarina, Former Versace Estate Tied To Rothstein Case, Files For Bankruptcy

FORT LAUDERDALE, Fla. - Casa Casuarina LLC, the former mansion of designer Gianni Versace from which the trustee in the separate Chapter 11 bankruptcy of the former law firm of Rothstein Rosenfeldt Adler (RRA) sought to recover what he said were fraudulent transfers, on July 1 filed for Chapter 11 bankruptcy. VM South Beach LLC, which is not a creditor in RRA's bankruptcy, says it holds a valid and perfected first mortgage on Casa Casuarina and moved immediately for appointment of a Chapter 11 trustee (In Re: Casa Casuarina LLC, No. 13-25645, Chapter 11, S.D. Fla. Bkcy.).

Oil Production Platform Owner Unable To Shake Clean Water Act Claims

NEW ORLEANS - A federal judge in Louisiana on July 1 denied an oil production platform owner's attempt to dismiss claims for violating the Clean Water Act (CWA) and Outer Continental Shelf Lands Act (OCSLA) for excessive discharges of oil in wastewater, finding that two exclusions to CWA liability are inapplicable (United States of America v. ATP Oil & Gas Corporation, et al., No. 13-0262, E.D. La.; 2013 U.S. Dist. LEXIS 91946).

9th Circuit: Bankruptcy Judge Did Not Err In Hearing Marshall Chapter 11 Case

SAN FRANCISCO - A panel of the Ninth Circuit U.S. Court of Appeals on June 28 ruled that a bankruptcy judge who refused to recuse himself from a bankruptcy proceeding did not abuse his discretion when he presided over both the bankruptcy of Vickie Lynn Marshall, also known as Anna Nicole Smith, and that of another potential heir to the estate of J. Howard Marshall II, his son J. Howard Marshall III (Elaine T. Marshall v. J. Howard Marshall III $(In the Matter Of: J. Howard Marshall III$), No. 09-55573, Chapter 11, 9th Cir.; 2013 U.S. App. LEXIS 13398).

Jefferson County, Ala., Plan Calls For JPMorgan Chase To Cut Claims To $1.9B

BIRMINGHAM, Ala. - Bankrupt Jefferson County, Ala., on June 30 filed is Chapter 9 plan in the U.S. Bankruptcy Court for the Northern District of Alabama in which JPMorgan Chase Bank would agree to reduce its $3.2 billion in claims to $1.9 billion in order for the county to emerge from bankruptcy (In Re: Jefferson County, Ala., No. 11-5736, Chapter 9, N.D. Ala. Bkcy.).

7th Circuit: Illinois Law Bars State's Recovery Of Debtor's Tax Payments

CHICAGO - A panel of the Seventh Circuit U.S. Court of Appeals on June 28 ruled that tax credits sought by the State of Illinois from a now-bankrupt company were not available based on amendments to the state's public utilities law (State of Illinois v. Chiplease Inc. $(In Re: Resource Technology Corp.$), No. 11-1633, Chapter 7, 7th Cir.; 2013 U.S. App. LEXIS 13271).

8th Circuit: No Violation In Decision Forcing Debtors' Home To Be Vacated

ST. LOUIS - A panel of the Eighth Circuit U.S. Court of Appeals on June 28 ruled that the City of St. Paul, Minn., and U.S. marshals did not violate a man's constitutional rights when they forced him to vacate a property in which a bankruptcy court had determined he could no longer live based on a long-standing ownership dispute in two bankruptcies that had been filed by his parents (Andrew Will Alexander v. John A. Hedback, No. 12-2834, Chapter 11, 8th Cir.; 2013 U.S. App. LEXIS 13302).

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.).

Plan Administrator That Didn't Supervise TPAs Is Hit With $1.8M COBRA Penalty

INDIANAPOLIS - A class of 741 former Visteon Corp. employees is entitled to more than $1.8 million in penalties based on the company's failure to provide them with timely notices of their rights to continued health care coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), a federal judge in Indiana ruled June 25 (Darryl Pierce, et al. v. Visteon Corporation, et al., No. 1:05-cv-01325, S.D. Ind.; 2013 U.S. Dist. LEXIS 88817).

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. $(United States Gypsum Company, et al. v. G-I Holdings, Inc., No. 2:12-cv-06933, D. N.J.$)).

Chancellor Says Delaware Corporations' Forum Selection Bylaws Are Valid

WILMINGTON, Del. - A Delaware chancellor granted a motion to dismiss a pair of shareholder lawsuits on June 25, finding that forum selection corporate bylaws adopted by the boards of two companies are valid (Boilermakers Local 154 Retirement Fund, et al. v. Chevron Corporation, et al., No. 7220-CS, Del. Chanc. and Iclub Investment Partnership v. Fedex Corporation, No. 7238-CS, Del. Chanc.; 2013 Del. Ch. LEXIS 154).

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.).

Split N.Y. Appeals Court Rules On Assistant Managers Participating In Tip Pool

ALBANY, N.Y. - An employee who is "granted meaningful authority or control over subordinates can no longer be considered similar to waiters and busboys" under New York Labor Law Section 196-d and may not participate in an employer-mandated tip pool, a split New York Court of Appeals ruled June 26 in a single opinion addressing two tip-pooling suits brought by Starbucks Corp. employees (Jeana Barenboim, et al. v. Starbucks Corporation, Eugene Winans, et al. v. Starbucks Corporation, No. 122, N.Y. App.; 2013 N.Y. LEXIS 1678).

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).

Federal Circuit Upholds Patent Invalidity Ruling In Drug Dispute

WASHINGTON, D.C. - Finding that there is no genuine issue of material fact that the shared specification of two patents do not enable one of ordinary skill to practice certain claims without undue experimentation, the Federal Circuit U.S. Court of Appeals on June 26 affirmed a finding of patent invalidity for lack of enablement (Wyeth and Cordis Corporation v. Abbott Laboratories et al., Nos. 12-1223, 1224, Fed. Cir.).

Federal Judge Compels Arbitration Of Dispute Over Broker's Agreement

GREENSBORO, N.C. - A North Carolina federal judge on June 25 granted a motion to compel arbitration filed by a group of companies in relation to disputes over a broker's agreement, finding that the petitioner in the case was equitably estopped from denying enforcement of an arbitration provision in an underlying contract (Fastener Corporation of America v. Asheboro Elastics Corp., et al., No. 1:12-CV-1296, M.D. Fla.; 2013 U.S. Dist. LEXIS 88834).

Shareholders Ask For Approval Of $7 Million Settlement Of Derivative Suit

LAS VEGAS - Shareholders suing a company's directors and officers for breach of fiduciary duty asked a Nevada federal court on June 24 to approve a $7 million settlement of the shareholders' derivative lawsuit (In re Rino International Corporation Derivative Litigation, No. 10-cv-02209, D. Nev.).

Visa, MasterCard Seek Stay Of Retailers' Antitrust Suit Over Fees

NEW YORK - In response to retailers' complaint that they exercised their market power to preclude issuing banks from competing for merchant acceptance of credit and debit cards, thereby causing the merchants to pay excessive interchange fees, Visa and MasterCard on June 25 moved to stay all proceedings pending final decision on transfer by the Judicial Panel on Multidistrict Litigation (JPML) (Target Corporation, et al. v. Visa Inc., et al., No. 13-3477, S.D. N.Y.).