Improperly Taking $297.72 Results in $250,000 in Punitive Damages for Stay Violation
Creditor’s unrepentant attitude escalates punitive damages from $33,700 to $250,000.
Judge Name - Do not use it.
Kay Woods
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Ninth Circuit to Rehear Case Denigrating the Status of Bankruptcy Appellate Panels
Ninth Circuit will decide en banc whether BAPs were “established” by Congress.
Judge Name - Do not use it.
J. Clifford Wallace, Jay S. Bybee
Circuit Split Widens on Test for Nondischargeability from Late-Filed Tax Returns
Ninth Circuit avoids the one-day-late rule for nondischargeability of tax debts.
Judge Name - Do not use it.
Morgan Christen
Second Circuit Drubs New GM on Successor Liability for Ignition Switch Defects
Due process failure exposes New GM to liabilities for Old GM’s conduct.
Judge Name - Do not use it.
Denny Chin
GM Reaches Deal with Bankrupt Supplier Clark-Cutler-McDermott
General Motors Co. resolved a dispute with financially troubled auto-parts supplier Clark-Cutler-McDermott Co. (CCM) in a deal that averts a potential production shut down of some of GM North American operations, the Wall Street Journal reported today. The agreement, approved by a federal bankruptcy court judge in Massachusetts yesterday, allowed GM to purchase equipment and inventory that the auto maker said it must have to avoid any production interruptions. CCM, which produced 175 parts for GM and is the Detroit auto maker’s only supplier of certain interior and acoustic insulation parts, also received court approval to terminate its contract with GM, clearing the path for CCM to sell its closed operations. The 115-year-old company has been a General Motors “Supplier of the Year” four times in the last seven years, but said the relationship soured as it absorbed losses of $12 million since 2013. The Franklin, Mass., company filed for bankruptcy protection on July 7, saying that it was losing $30,000 a day as a result of its contract with GM. Read more. (Subscription required.)
Gain deeper insight into the particular concerns of supply-chain companies in bankruptcy with Interrupted! Understanding Bankruptcy’s Effects on Manufacturing Supply Chains, available in the ABI bookstore.
Second Circuit Drubs New GM on Successor Liability for Ignition Switch Defects
The Second Circuit handed a stinging defeat to General Motors Co. (also known as New GM) in an opinion on July 13 that countenances no excuse for failing to give actual notice to creditors of an impending sale when the company in reorganization knows the claims to exist, according to an analysis by ABI Editor-at-Large Bill Rochelle. It is not entirely clear from the opinion whether a purely third-party purchaser of assets “free and clear” at a bankruptcy sale will be saddled with successor liability on claims of known creditors who were not given notice of an upcoming sale. In the GM case, the auto maker essentially remained in business after the assets were sold in a Section 363 sale, thus making successor liability an easier pill to swallow. Although the Second Circuit is allowing lawsuits against New GM based on defective ignition switches, the appeals court did not decide whether New GM in fact has successor liability. The opinion is an important pronouncement on the due process rights of known creditors and the consequences of a lack of notice. The opinion leaves open the question of whether the lack of prejudice can turn a due process violation into harmless error. Full analysis.
Click here to read the ruling.
Don’t miss the Great Debate at ABI’s Views from the Bench conference on Oct. 7, as Judge Robert Gerber (ret.) & Goodwin Procter's William Weintraub debate whether §363 sales lawfully be free and clear of successor-liability claims. The early bird rate expires on Friday, so please register here!
Delaware’s Judge Gross Differs with Second Circuit on the Safe Harbor
Judge Gross finds Judge Gerber in Lyondell more persuasive than the Second Circuit in Tribune.
Judge Name - Do not use it.
Kevin Gross
Standards Governing Judicial Estoppel Appeals Are Debated in the D.C. Circuit
Majority in D.C. Circuit are flexible on judicial estoppel summary judgment motions.
Judge Name - Do not use it.
A. Raymond Randolph, Thomas B. Griffith
Pacific Andes Willing to Meet Lenders Alleging Fabrications of Revenue, Payments
All the chapter 11 filings from Pacific Andes group companies will be administrated in the U.S. together, with the company willing to meet with lenders alleging some $1 billion of suspicious transactions, Undercurrent News reported yesterday. During a hearing in New York on July 11, the court approved the motion by the group for joint administration under chapter 11. In addition, the company’s counsel “confirmed their willingness to meet with counsel representing creditors on July 14, 2016 in an effort to address outstanding issues between the parties.” The group indicated to the court that the motion relating to cash management would likely be made by the end of this week after consultation with counsel to the club lenders on a confidential and non-disclosed basis later this week. This comes after four Pacific Andes lenders filed a document on July 8, alleging there are $1 billion in "questionable transactions" in the group and suspicions of "substantial" fabrications of revenue and payments.
Lawsuits Push Gawker’s Nick Denton to Brink of Bankruptcy
Lawyers for Gawker Media LLC say that founder and Chief Executive Nick Denton will join his media company in bankruptcy unless a judge steps in to block litigation from former professional wrestler Hulk Hogan and his billionaire backer, the Wall Street Journal reported today. Gawker’s lawyers said in court papers filed on Monday that the personal bankruptcy filing “would undoubtedly occur” if a judge rejects Gawker’s bid for an injunction that would halt legal action from Terry Bollea, the wrestler’s real name, as well as others who have sued the embattled publisher. William Holden, Gawker’s chief turnaround officer, said in sworn testimony that Denton has already hired bankruptcy lawyers using a $200,000 loan from the company. Bollea won a $140 million judgment against Gawker earlier this year that ultimately pushed the company into chapter 11. The invasion-of-privacy suit was tied to a tape of Bollea having sex, which Gawker published in 2012. Denton is jointly liable along with another former Gawker employee for $115 million of the judgment and is personally liable for another $10 million.
