3rd Circuit

Third Circuit Says: Bankruptcy Courts Have No Discretion to Deny Examiner Motions

Although examiners must be appointed on motion, the Third Circuit says that the bankruptcy court retains ‘broad discretion’ to fix the scope and cost of the investigation.

No Condemnation When Government Takes Over Property to Prevent Public Injury

No reverse condemnation occurred when the state took over a debtor’s property to prevent an imminent threat to public health.

Oil and Gas Royalties Never Become Estate Property in Colorado

The Third Circuit gave royalty owners a constructive trust over royalties improperly paid to secured creditors. The circuit court did not rule on remedy.

Whether a Fraudulent Transfer Claim Is ‘Direct’ or ‘Derivative’ Depends on Point of View

A D&O policy covering securities claims doesn’t provide coverage for a claim resulting from a fraudulent transfer, the Delaware Supreme Court rules.

Actual Damages Not Required to Recover Attorneys’ Fees for a Stay Violation

Judge Goldblatt slaps creditors with $665,000 in damages for violating the automatic stay.

Lawyer Must Disclose a Client’s Misconduct, Even When It’s ‘Uncomfortable’

Lawyers aren’t guarantors for a client’s misconduct, but they may be sanctioned for a coverup.

Judge Goldblatt on the Imputation of Fraudulent Intent to a Delaware Corporation

The fraudulent intent of an individual who controls a corporation can be imputed to the corporation itself, even if the board is unaware of fraud.

It’s Ok for Lenders to ‘Manufacture’ a Favorable Venue, Delaware Judge Says

A Delaware opinion states that debtors can’t reincorporate to manufacture venue, but it’s permissible for lenders to do so.

Bankruptcy Judge Hints: Third Circuit Precedent on Public Records May Be Too Broad

Delaware’s Judge Goldblatt seems to be recommending that the Third Circuit close a loophole in confidentiality agreements.

A Settlement Term Sheet Signed After Mediation Was an Enforceable Contract

The state law standards for creation of a contract governed enforceability of a term sheet signed after mediation.