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Since the time of our last post on August 24, 2015, Alan D. Halperin, the Trustee of the FBI Wind Down, Inc. Liquidating Trust has filed 94 additional preference complaints seeking to avoid and recover alleged preferential transfers pursuant to Sections 547 and 550 of the Bankruptcy Code. Defenses to a Preference Action Preference actions are a form of litigation specifically provided for by the Bankruptcy Code which are intended to recover payments made by the Debtor within the 90 days prior to declaring bankruptcy.  Recognizing that these payments aren’t always made for inappropriate reasons, the Bankruptcy Code provides creditors with many defenses to preference actions. Included among these are the “ordinary course of business defense” and the “new value defense.” For reader’s looking for more information concerning claims and defenses in preference litigation, attached is a booklet that we have prepared on the subject: “A Preference Reference: Common Issues that Arise in Delaware Preference Litigation.”
10 hours 9 min ago
On September 2, 2015, Hulu announced that it would offer an ad-free level of its popular streaming service. This prompted a lot of my Facebook friends to start talking about cutting their cable service. According to the company’s press release:
Viewers now have the choice to watch Hulu commercial free for $11.99 per month or with limited commercials for $7.99 per month. Current Hulu subscribers will maintain their existing subscription, but will have the choice to switch to the commercial-free option at any time for an additional $4 per month. For viewers who choose to watch content with limited commercials, Hulu will continue to show fewer commercials than scheduled television.
With so many options out there for getting your favorite shows on demand, is there any reason to keep paying for cable or satellite TV? For years I’ve watched my clients struggle with cable bills that come to well over $200 each month, draining their wallets for the privilege to do the same things we used to get for free – watch television.
14 hours 46 min ago
By Beau HaysHays, Potter & Martin, LLPPeachtree Corners, GA Judge Margaret Murphy of the Bankruptcy Court for the Northern District of Georgia recently handed down a victory for Trustees (and creditors) in a case involving a carve-out negotiated with secured lenders to allow for a short sale and create a fund for unsecured creditors. In re Diener,  No. 11-83085-MHM (Bankr. N.D.Ga.

Read More from: CLLA Bankruptcy Blog

16 hours 30 min ago
Three native surfers ride their boards with ease at Waikiki Beach, with Diamond Head in the background, Honolulu, Hawaii, 1920s. (Photo by Underwood Archives/Getty Images)
Underwood Archives/Getty Images
Hilo Hattie, a popular chain for Hawaii’s tourists in search of souvenirs, laid out a plan to get out of bankruptcy and repay some of its debts after selling its most valuable location for $5.1 million earlier this year. In court papers, Hilo Hattie lawyers proposed to use the sale money to repay a portion of the company’s debts, including a $360,000 chunk of sale money that would flow to unsecured creditors who are owed more than $3 million. The plan projects that the 52-worker chain, which has downsized from seven to three locations, will start seeing sales grow starting next year. By 2020, the chain expects to take in about $7.5 million from the sale of its travel trinkets, Hawaiian floral-printed shirts and other inventory, according to documents filed in U.S. Bankruptcy Court in Honolulu. The survival plan still needs approval from Bankruptcy Judge Robert Faris and from creditors, who have the power to vote against it.

Read More from: Bankruptcy Beat

17 hours 24 sec ago
Electronics-equipment recycler ZLOOP, which is now in bankruptcy, once tried to find a way to dispose of Keurig machines.
Shannon Stapleton/Reuters
All those little plastic Keurig K-Cup coffee pods buried in landfills are getting a lot of attention from environmentalists, but what about the disposal of the machines themselves? That was the problem that now-bankrupt electronic equipment recycler ZLOOP Inc. once tried to fix. With a giant crushing and sorting machinery installed at its North Carolina headquarters, the company made a $7 million deal to recycle Keurig coffee machines. Starting in 2013, the company turned the discarded machines into more than two million pounds worth of parts, ZLOOP co-founder Robert LaBarge told Bankruptcy Beat. But the deal to break down Keurig machines ended last year when an investor sued the company and its top officials for overpromising on revenue expectations and expansion plans—a violation of securities laws, according to the lawsuit.

Read More from: Bankruptcy Beat

17 hours 52 min ago
The former chief operating officer and chief credit officer of a California-based bank that went bust must spend more than eight years in prison, a federal judge ruled Tuesday. Ebrahim Shabudin, 66 years old, had been convicted of seven federal fraud charges following the 2009 collapse of United Commercial Bank. Prosecutors accused Mr. Shabudin of orchestrating an elaborate scheme to hide the bank’s troubled finances, including securing more than $300 million in federal bailout funds that were lost when the bank failed in 2009. Its assets were sold to another bank, and its parent filed for bankruptcy liquidation. Specifically, Mr. Shabudin was accused of falsifying bank records to hide millions of dollars in losses and shore up the bank’s reputation during the height of the financial crisis. After a six-week trial, a jury in March found him guilty of securities fraud and six other charges. Christy Romero, watchdog for the federal bailout program, called the case “the most significant prosecution” of crimes tied to the bailout.

Read More from: Bankruptcy Beat

18 hours 23 min ago
Some bankruptcy cases can have long tails with issues developing years after the entities confirm their chapter 11 plans.  That seems to be particularly true when cases deal with mass torts.  As the recent case of Piper Aircraft Corporation demonstrates, an issue can arise in a chapter 11 case over twenty years after the debtor’s plan was confirmed.  In Piper’s case, the United States Bankruptcy Court for the Southern District of Florida was required to decide whether claims filed by victims of two plane crashes were the types of claims that were channeled to the trust established under Piper’s chapter 11 plan or whether they were independent claims that could be asserted against the purchaser of Piper Aircraft’s assets.  Background
18 hours 57 min ago
When the Supreme Court issued its decision in Baker & Botts L.L.P. v. ASARCO LLC in June, it caused something of a flutter in the bankruptcy community. The decision held that a professional could not recover for the fees it incurred in defending against objections to its fee application. The decision focused on the so-called “American Rule” as “the basic point of reference.” Under the American Rule, a party is responsible for its own legal expenses unless a statute or contract provides otherwise.  The Court went on to conclude that section 330 of the Bankruptcy Code did not provide a basis for a departure from the American Rule. The Court noted that compensation authorized by that section is limited to “actual, necessary services rendered,” which suggests the services must be for the benefit of the client rather than the professional.

Read More from: eSQUIRE Global Crossings

19 hours 24 min ago
   The Eigth Circuit decision in Venture Bank v. Lapides, No. 14-3085, 2015 WL 5011704 (8th Cir. Aug. 25, 2015)  involved a motion for discharge violation asserted against a third mortgage.  Shortly after the discharge, the parties entered into a reaffirmation agreement, but the debtor's attorney refused to sign the agreement and it was never filed.  Subsequent the debtor and his spouse executed two 'Change in Term Agreements' on the mortgage, each extending the term by six months.  These agreements were made with the understanding that it would enable the borrowers to rebuild credit with the bank, so the bank would refinance all three mortgages.  Twelve payments of $3,500 were made under the agreements.  The bank repeatedly emailed the borrowers as to the payments due and requesting additional principal payments.  When there was a subsequent default on that mortgage in May 2011, the bank filed suit against both the debtor and spouse.  The Debtor had the case removed to bankruptcy court, wherein the Court found the agreements were not enforceable as failing to comply with the reaffirmation requirements, and awarded damages for violation of the discharge injunction.  The District Court affirmed.        The Circuit Court affirmed, but held that in order for an agreement to be enforceable post-petition, it must not only meet the reaffirmation requirements of §524(c), but must also be enforceable under state law.  Id. at *3.

Read More from: Tampa Bankruptcy

21 hours 10 min ago
Mediation has become an invaluable tool in large chapter 11 cases. Traditionally viewed as a means for resolving discrete disputes between a debtor’s estate and an adversary party, in recent years mediation in certain complex cases has evolved into a multi-party undertaking involving claimants from all levels of a debtor’s capital structure, with the ambitious goal of resolving the entire case through a consensual plan of reorganization.

Read More from: Bankruptcy Law Insights

21 hours 24 min ago
ISS counts Tempur Sealy as among the 28 proxy contests during the first six months of 2015, the busiest period for contests since 2009, even though the dissidents waged a “vote no” campaign instead of nominating alternative director candidates. The overall dissident “win rate” calculated by ISS decreased from 67% for all of 2014 to 46% for the first six months of 2015, particularly where the targeted company had a market cap above $1 billion. The firm believes that these results were affected by the absence of notable “heavyweights” in contests owing in part to settlements. 
22 hours 7 min ago
A judge “strongly” recommended that Patriot Coal Corp.’s buyer and its miners’ union keep engaging in bargaining talks, Daily Bankruptcy Review reports via The Wall Street Journal. (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit, scroll to the bottom and click “try for free.”) Puerto Rico’s power authority, Prepa, reached a restructuring deal with bondholders, WSJ reports. Bloomberg reports that Republic Airways Holdings Inc. might be getting closer to a possible bankruptcy after national Teamers backed the company’s pilots union on not voting on a final contract offer. According to Law Blog, the defense team for three former Dewey & LeBoeuf LLP lawyers failed to get their financial fraud case thrown out.

Read More from: Bankruptcy Beat

1 day 9 min ago
Farmer v. Citizens Nat’l Bank of Athens (In re Davis), 528 B.R. 757 (Bankr. E.D. Tenn. 2015) – A chapter 7 trustee sought a court determination that the trustee had a superior claim to settlement proceeds arising from damage to real property.  … Continue reading →
1 day 1 hour ago
How many ages hence / Shall this our lofty scene be acted o’er, / In states unborn, and accents yet unknown! – William Shakespeare, Julius Caesar Yesterday, we began our analysis of Judge Scheindlin’s recent decision in the Caesars parent guarantee litigation.  Our initial discussion is available here.  Today, we bring you the next exciting chapter of our review of the other questions considered by the court, together with an assessment of the critical issues facing courts considering modifications of noteholders’ rights.  We return to our regularly scheduled programming, at question #2 before the court….  What Types of Impairment Violate the Trust Indenture Act?
1 day 15 hours ago
Phil Heath, who won the Mr. Olympia in 2012, poses for a portrait Sept.18, 2013, in Los Angeles. Supplement maker Ultimate Nutrition is suing the contest’s organizers to try to block them from making sponsorship deals with competitors.
Nick Ut/Associated Press
A company that makes tubs of protein-shake powder for bodybuilders is suing the organizers of the upcoming Mr. Olympia contest to try to block them from making major sponsorship deals with the manufacturer’s competitors. With its lawsuit, Connecticut-based Ultimate Nutrition Inc. said the organizers of Mr. Olympia—the top U.S. bodybuilding competition, held in Las Vegas—are advertising new sponsorship deals for companies that want their “brand front and center” at the Sept. 17-20 event. Those offers infringe on Ultimate Nutrition’s exclusive sponsorship deal, the company said.

Read More from: Bankruptcy Beat

1 day 16 hours ago
In what looks like a case study in the need to diversify, Univita Health Inc. filed for Bankruptcy in the District of Delaware on August 28, 2015 – It is being administered as Case No. 15-11788.  Pursuant to the Bankruptcy Petition it filed, Univita has also filed for bankruptcy under chapter 7 for 11 affiliates. Although no official explanation for the bankruptcy filing appears on the docket, a quick Google search leads me to believe that Univita was the sole authorizer of home services for most Medicaid plan members in Florida.  Univita broadened its business to compete in the home health-care sector, and may have stepped on some toes in the process.  Regardless of whether it was forced into bankruptcy because of low payment rates from Medicaid or the termination of its contract by the Florida Agency for Health Care Administration (the “AHCA”), it appears likely that a single aspect of its business caused its ultimate failure.  The AHCA now lists Univita as “CLOSED”.  The listing is on AHCA’s Website here. While explanations are not readily apparent on the docket, they will likely be provided at the 341 Meeting of Creditors, which is currently scheduled for 9/25/2015 at 11:00 AM at the J. Caleb Boggs Federal Building, 844 King St., Room 2112, Wilmington, DE 19801.
1 day 17 hours ago
Some people choose to suffer through a debilitating financial situation rather than seek the perfectly legal remedy of bankruptcy – simply because of the anticipated social ramifications of doing so. Financial woes are indiscriminate across all socio-economic lines, rich or poor, many people find themselves unable to meet their financial obligations.
  • The rising cost of health-related expenses are such that an unexpected medical emergency or catastrophic illnesses have the propensity to send anyone into financial ruin.
  • Fickle economic times have caused many to lose their jobs while also preventing them from securing other employment.
  • The long-term effect of the loss of income causes many to get behind on their mortgages and other monthly expenditures.
  • Although the real estate market is recovering in many areas of the country, others are under the burden of under-valued real estate that was purchased at once premium dollar amounts.
All these scenarios put unprepared consumers at risk of having not having enough cash coming in to pay their way each month. Living with the strain of financial stress causes mental, physical and emotional damage. However, it need not cause social agony as well. Often, the social and emotional stigmas associated with bankruptcy are self-inflicted. We think ill of ourselves, so we project that others are doing so as well.
1 day 19 hours ago
Melanie Cohen
Just more than a year since his 11th-hour move to resurrect Crumbs Bake Shop Inc., investor and television personality Marcus Lemonis announced that he’s selling his stake in the bakery. Fischer Enterprises LLC, which owns Dippin’ Dots and which currently holds the majority stake in the business, has purchased his piece of the company, Mr. Lemonis said Tuesday. The investor and television personality added that he’s taking a “sizable loss” in the deal that was brokered during Crumbs’ bankruptcy case last year but didn’t name a purchase price. Mr. Lemonis said he made the decision to sell after realizing that he had underestimated his opportunities to grow the business as a minority owner of the company. “When I got into the deal, I was looking to grow the business. I’m in business to be able to affect change,” Mr. Lemonis said Tuesday. “I have a lot of respect for the Fischers, but I miscalculated my ability as a minority stakeholder to affect change.” Fischer Enterprises confirmed the transaction to Bankruptcy Beat and said the operations of the company won’t be affected. Although the deal does means that Mr. Lemonis won’t have any involvement in the company going forward, he is retaining the rights to the Crumbs name for cookies, ice cream and candy products.

Read More from: Bankruptcy Beat

1 day 19 hours ago
A new study by the Richmond Fed confirms that swipe fees have only gone down for a small fraction of merchants, contrary to congressional intent. This finding should spur the central bank to limit price-fixing to a reasonable level.

Read More from: BankThink

1 day 19 hours ago
Fear accompanies debt, like a man and his shadow. People in debt are afraid of the caller on the phone.  They are afraid of the process server.  They are afraid of the truth getting out. Yet, they fear bankruptcy more, apparently. They seem to fear that life as they know it will end if they file bankruptcy. Well, at some level, the miserable life of living in debt; sleepless nights;  having no financial  reserves will end if they file bankruptcy. But they have cultivated a fear of bankruptcy that is stronger than the fear they live with now. Most fear is self generated It’s easy to fall into the trap that filing bankruptcy represents defeat, as a personal failure. My view:  most bankruptcy these days is driven by job loss, ill health, and divorce. Some fear public exposure. They imagine those around them standing in judgment on their life choices. Yet which of us chooses illness, accident, or unemployment? The failure I see is the unwillingness to utilize an effective and legal means to become economically stable. Why no fear of penniless old age This seems to me to be a real fear. Almost every client who’s struggling to repay credit cards, now at 29% interest, is skimping on saving for retirement.
1 day 20 hours ago