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 Morris James LLP is pleased to announce that thirteen attorneys in five separate practice areas have been top ranked among the leading Delaware lawyers in the 2014 edition of Chambers USA: America’s Leading Lawyers for BusinessChambers also ranked four of its practice areas as among the top practices in Delaware including Bankruptcy/Restructuring, Chancery, Intellectual Property and Labor & Employment.   Read more.  
4 years 9 months ago
State Street Global Advisors’ (SSgA) 2014 voting policy on director tenure focuses on what it identifies as the need for “board refreshment.” The policy outlines situations that could trigger the investor to vote against directors at its investee companies due to lengthy tenures. Unlike other major investors and even the proxy advisory firms, SSgA has provided specific guidance relating to the number of years of service it deems to be excessive, based on comparison with the average director term for the particular market.
4 years 9 months ago
Posted by Kathy Bazoian Phelps     In a case arising out of the Bernard Madoff Ponzi scheme, the United States Tax Court recently considered whether federal estate tax must be paid on the amount identified on the Madoff account statement at the time of the death of the decedent account holder, or whether no tax is owed because the account really had nothing in it. Kessel v. Commissioner of Internal Revenue, 2014 Tax. Ct. Memo LEXIS 98 (May 21, 2014).     Although no definitive answers were provided because the court simply denied the IRS’s motion for summary judgment, the opinion is thought-provoking nonetheless. The facts are that Bernard Kessel, the decedent, had an account with Madoff that was valued at $4.8 million at the time of his death in 2006. We now know that the account was actually worthless at that time because Madoff never actually invested in any securities. Kessel’s estate paid about $1.9 million in federal estate tax, but then sought a refund after the Madoff fraud was revealed in 2008.     The executrix of Kessel’s estate had had the Madoff account appraised by an appraisal service and, based upon that report, the estate paid the tax owing. Following the demise of the Madoff scheme in 2008, however, the estate sought to recover the assets in the Madoff account.

Read More from: The Ponzi Blog

4 years 10 months ago
By: Justin A. Saporito, Law Clerk Bradford & Byrd Associates, Inc. filed for voluntary Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of New Jersey on May 23rd, 2014.  The case has been assigned to the Honorable Christine M. Gravelle under case number 3:14:bk-20478. Debtor claims assets of less than $50,000 with liabilities ranging between $500,000 and $1 million.  Among debtor’s 21 creditors are the Internal Revenue Service, New Jersey Department of Labor, New York State Workers Compensation Board, Mercedes Benz, and several other companies and private individuals.  Debtor is represented by Bunce Atkinson of Atkinson & DeBartolo, PC from Red Bank, New Jersey.
4 years 10 months ago
The Fifth Circuit has reversed a Bankruptcy Court's decision to impose death penalty sanctions against a creditor where the lower court found that "the very temple of justice has been defiled." The Bankruptcy Court had found that the actions of an attorney who was the Cadle Company's long-time lawyer and was representing the Trustee as special counsel could be imputed to Cadle.   The Fifth Circuit, on the other hand, found that the attorney was not acting as Cadle's attorney and that the Bankruptcy Court had acted without clear and convincing evidence of bad faith. No. 13-10325, The Cadle Company v. Moore (5th Cir. 1/9/14). The Fifth Circuit opinion can be found here, while my prior post can be found here.While the Bankruptcy Court was outraged at the apparent duplicity by the Cadle Company and its attorney, the Fifth Circuit was mildly concerned with the attorney's non-disclosures but did not attribute them to Cadle. While the Bankruptcy Court drafted a 52 page opinion which set forth its findings in detail, the Fifth Circuit devoted just 6 1/2 pages to its discussion of the merits. The Fifth Circuit dismissed the Bankruptcy Court's extensive findings as nothing more than imputed bad faith and suspicion. The two opinions are a bit like the parable of the blind men and the elephant.
4 years 10 months ago
I've been meaning to do some research on multiemployer pension plans and how they are treated in bankruptcies, mainly because as an investor, it is difficult to value a company that participates in one of these plans. In this post, I will give a background of multiemployer pension plans, their challenges, and proposed reforms. In the next post, I will discuss liability disclosures and valuation of companies from an investment standpoint. Hostess is a good case study for this topic because we see the impact of a bankruptcy on other employers that contribute to the multiemployer pensions. When Hostess filed for bankruptcy in 2012, the world was aghast at the possibility losing the "golden sponge cake with creamy filling" called the Twinkie. The filing came just a few years after completing a an earlier restructuring and purchase by Ripplewood Holdings. The pastry maker cited pension and medical benefits obligations for its financial downfall. At the time, Hostess employed 18,500 employees, 83% of which were were union members. BloombergThen, Apollo and Metropoulos used their resurrection stone to bring back the famed confectioner from the dead.
4 years 10 months ago
A recent ruling in the Chapter 11 case of Free Lance-Star Publishing limited the credit bidding rights of a secured creditor.  The ruling has called into question the ability of the holder of secured debt to utilize such debt to acquire companies on a going concern basis in bankruptcy cases, particularly in instances where the debt was acquired at a discount for such express purpose.  Because this has been a common strategy of numerous hedge funds and investment vehicles that have found no shortage of willing sellers among commercial banks and other traditional lenders holding large portfolios of troubled loans, the Free Lance-Star Publishing decision and an earlier substantially similar ruling in the Chapter 11 case of Fisker Automotive have justifiably received wide attention.

Read More from: Bankruptcy Law Insights

4 years 10 months ago
A recent ruling in the Chapter 11 case of Free Lance-Star Publishing limited the credit bidding rights of a secured creditor.  The ruling has called into question the ability of the holder of secured debt to utilize such debt to acquire companies on a going concern basis in bankruptcy cases, particularly in instances where the debt was acquired at a discount for such express purpose.  Because this has been a common strategy of numerous hedge funds and investment vehicles that have found no shortage of willing sellers among commercial banks and other traditional lenders holding large portfolios of troubled loans, the Free Lance-Star Publishing decision and an earlier substantially similar ruling in the Chapter 11 case of Fisker Automotive have justifiably received wide attention.

Read More from: Bankruptcy Law Insights

4 years 10 months ago
Image courtesy of Matt H. Wade In December 2013 I wrote about the Innovation Act, H.R. 3309, a bill focused on patent infringement litigation and other patent law reforms that passed the House of Representatives on a bipartisan basis. My interest in the bill was because it would make the most sweeping changes to the treatment of intellectual property licenses in bankruptcy since the 1988 enactment of Section 365(n) of the Bankruptcy Code. Follow the link in this sentence for a full discussion of the proposed law. Proposed Changes In The House-Passed Innovation Act. To bring you up to date, here are the four major changes the Innovation Act would make to Section 365(n)’s protections for IP licensees.
4 years 10 months ago
Reversing the Minnesota bankruptcy court, an intermediate federal appeals court ruled that a property tax refund owed to a bankrupt homeowner cannot be claimed exempt.  Manty v. Johnson (In re Johnson), No. 13-6050 (8th Cir. BAP April 22, 2014). The appeals court said that the bankruptcy court was mistaken when it held that a Minnesota property tax refund was protected by Minnesota Statutes Section 550.37, subd. 14.  This statute provides an exemption for “government assistance based on need.” The debtor in this chapter 7 case was an 88 year old widow who owned a home valued at $200,000 with about $150,000 in equity.  Her only regular source of income was Social Security, with occasional income from renting out a room in her home. At the time the case was filed, the debtor was entitled to a property tax refund of $1,947.  She claimed the property tax refund as exempt pursuant to section 550.37, subd. 14, reasoning that it was government assistance.  After the bankruptcy court sustained her claim of exemption, the chapter 7 trustee appealed to the Bankruptcy Appellate Panel.

Read More from: Bankruptcy Law Network

4 years 10 months ago
According to a recent speech by Chair White, one of the key decision points in nearly every enforcement action is who will be charged as a defendant. She disputed the notion that the SEC fails to charge individuals enough, since a recent internal analysis by the SEC staff showed that individuals were charged in 83% of SEC actions since the 2011 fiscal year.  
4 years 10 months ago
When someone leaves a job, is it always necessary to replace them?  The bankruptcy system’s watchdog seems to think so, even if that makes little sense. Chapter 7 Trustees are assigned randomly to bankruptcy cases to identify and liquidate property not protected from the creditors.  They are paid $60 per case and nothing else unless they can pay something on those debts.  So they’re like commissioned salespeople, being paid a base amount per account and no more unless they can close a deal. And deals are thinner these days.  Bankruptcy filings are down dramatically in the last three years, since the economic recovery began.  They are down over 25% in that time.  And business cases with potentially-large assets — and large commissions — are on the endangered species list. The reality in Chapter 7 is that the vast majority of cases pay the trustee only $60.  There’s nothing to sell.

Read More from: Bankruptcy Law Network

4 years 10 months ago
While the bankruptcy blogosphere patiently awaits a ruling in Bellingham, I thought I would drop in for a few brief updates on the most popular topic of 2014:  credit bidding.  I have previously written here on Fisker, and here on Free Lance-Star.  I have two updates, only one of which is actually substantive:

Read More from: Creditors' Sidebar

4 years 10 months ago
One of the fundamental tenets of a business bankruptcy reorganization plan under Chapter 11 of the Bankruptcy Code is the "absolute priority rule." This rule, codified in section 1129(b)(2)(B)(ii) of the Bankruptcy Code, provides that every unsecured creditor must be paid in full before the debtor can retain any property under a reorganization plan. Chapter 11, however, is not solely the domain of business debtors. Individuals (who more commonly seek protection under Chapters 7 and 13) may also file for Chapter 11. So how does the absolute priority rule affect individual debtors? That issue is analyzed in a recent opinion, Ice House America, LLC v. Cardin, issued by the U.S. Court of Appeals for the Sixth Circuit. Read More › Tags: 6th Circuit Court of Appeals, Chapter 11

Read More from: Michigan Bankruptcy Blog

4 years 10 months ago
While the battle over the SEC’s conflict minerals reporting rules have been the subject of much attention, less focus has fallen on the SEC’s defunct resource extraction rules. Since those rules were struck down in July 2013 as we previously discussed, the SEC has made no attempt, at least known publicly, to promulgate revised rulemaking in compliance with the Dodd-Frank statutory mandate. 
4 years 10 months ago
Courts in all states have procedures set to allow creditors to get judgments against the debtors who owe […] The post Can I Stop a Citation to Discover Assets By Filing For Bankruptcy? appeared first on LakeLaw.

Read More from: Lake Law Blog

4 years 10 months ago
Courts in all states have procedures set to allow creditors to get judgments against the debtors who owe […] The post Can I Stop a Citation to Discover Assets By Filing For Bankruptcy? appeared first on LakeLaw.

Read More from: Lake Law Blog

4 years 10 months ago
Courts in all states have procedures set to allow creditors to get judgments against the debtors who owe […] The post Can I Stop a Citation to Discover Assets By Filing For Bankruptcy? appeared first on LakeLaw.

Read More from: Lake Law Blog

4 years 10 months ago

Recently, a Florida District Court discussed whether a judge should be disqualified from a case after sending a Facebook “friend” request to one of the parties.  The case, Chace v. Loisel, No. 5D13-4449, 2014 WL 258620 (Fla. 5th DCA Jan. 24, 2014), involved a marriage dissolution.  Prior to entering a judgment in the case, the … Continue reading

The post Facebook “Friend” Request places Litigant between a Rock and a Hard Place appeared first on Robins Kaplan Trial Attorneys Blog.

4 years 10 months ago