Deepening Insolvency Trend Expands to Delaware
Spurred on by the current economic downturn, the use and acceptance of deepening insolvency as a cause of action in the bankruptcy arena continues to become more established and recognized. The Third Circuit already aided this development by recognizing deepening insolvency as a cause of action under Pennsylvania law in <i>Official Committee of Unsecured Creditors v. R.F. Lafferty & Co., Inc.</i>, 267 F.3d 340 (3d Cir. 2001). Now, the Delaware Bankruptcy Court in <i>In re Exide Technologies, Inc.</i>, 2003 WL 22079513 (August 21, 2003) has recognized deepening insolvency — this time as a valid cause of action under Delaware law — in a lawsuit by an unsecured creditors committee against lenders of a bankrupt company.
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'This Guy Walks into a Divorce Lawyer's Office ''
The traditional adversarial system continues to draw criticism when aggressively applied to family law cases. Apart from the inefficiencies, impracticalities and associated costs of strongly competitive approaches, the reasons for abandoning these poorly conceived methods of dispute resolution should be obvious.
Releasing the Albatross
Last month, we discussed the fact that Chapter 11 cases can last for months or years after plan confirmation solely as a result of unresolved disputed claims. To address the speedy resolution of such claims, debtors have increasingly turned to mandatory "alternative dispute resolution" (ADR). We discussed the utilization of voluntary ADR by bankruptcy courts, and the implementation of ADR procedures. This month, we discuss The Sixth Circuit's Decision in Spierer v. Federated Department Stores, et al. (In re Federated Department Stores), 328 F. 3d 829 (6th Cir. 2003) (hereinafter, "Federated"), wherein the Sixth Circuit affirmed the power of the bankruptcy courts to implement mandatory ADR procedures
'My Claim Is What?'
For many years, the holder of a stock redemption claim against a company in bankruptcy faced almost certain demotion to the class of interest holders. No matter how long ago the stock redemption occurred, no matter the solvency of the company, and no matter how innocent the holder appeared, any claim for unpaid installments due under a stock redemption agreement was sent to the back of the line. In 1996, the Supreme Court issued a decision that rekindled hope for stock redemption claimants; recent case law, unfortunately, has failed to maintain a uniform front on this issue.
Media Tips for Bankruptcy Lawyers
Is it safe to put your reputation in the hands of a reporter you do not know and have no reason to trust? Yes, but only if you follow the rules. Whether you are on the debtor or creditor side, following the rules will have you quoted often in the media, because reporters will know you are a good source for their bankruptcy-related stories.
The Wagoner Doctrine Keeps Rolling
A truism of bankruptcy is that assets available to pay creditors are few and far between. Among them are causes of action, and thus both debtors and trustees rightly hoard the right to sue third parties. Does the debtor or trustee have standing to sue when the entity brought the harm upon itself? Generally, the answer is no, and thus in this present environment of corporate misdeeds and scandals, litigation against outsiders is foreclosed by the debtor's own misfeasance.
