Federal Litigators Face New Burdens in E-Data Discovery
World Health Alternatives Upholds a Secured Creditor's Carve-Out Inuring Solely to the Benefit of General Unsecured Creditors
In In re World Health Alternatives, Inc., Case No. 06-10166 (July 7, 2006), the Bankruptcy Court for the District of Delaware held that—notwithstanding the Third Circuit’s recent opinion, In re Armstrong World Indus., Inc., 432 F.3d 507 (3d Cir. 2005)—a secured creditor "give-up" or "carve out" that inures solely to the benefit of general unsecured creditors does not violate the Bankruptcy Code.
Continue Reading Questions & commentsInternal Revenue Bulletin No. 2006-22 Sets Forth Procedures for Prompt Determination of Unpaid Tax Liabilities of a Bankruptcy Estate
On May 30, 2006, the Internal Revenue Service (IRS) published Internal Revenue Bulletin No. 2006-22, Revenue Procedure 2006-24. This bulletin sets forth the steps for a bankruptcy trustee or debtor in possession to follow in order to obtain a prompt determination by the IRS of any unpaid tax liability of the estate incurred during the administration of the debtor's case. The bulletin can be found at: http://www.irs.gov/irb/2006-22_IRB/ar12.html.
Continue Reading Questions & commentsCalifornia Court of Appeals Disagrees With Sherwood Partners and Holds That California Preference Laws Are Not Preempted by the Bankruptcy Code
On May 31, 2006, the California Court of Appeal for the Second Appellate District, in Haberbush v. Charles and Dorothy Cummins Family Ltd. Partnership, Case No. B175947, disagreed with the Ninth Circuit's majority opinion in Sherwood Partners v. Lycos, 394 F.3d 1198 (9th Cir. 2005) and held that California Code of Civil Procedure section 1800 is not preempted by the federal Bankruptcy Code.
Continue Reading Questions & comments"In re Submicron": Credit Bidding Revisited
In "In Re: Submicron Systems Corporation," ___ F.3d ___ (3rd Cir. 1/6/06), the Third Circuit affirmed the approval of a Bankruptcy Code Section 363 asset sale (over the objection of the Plan Administrator (the "Estate")) to a newly formed company ("Newco") comprised of (i) a third party ("Sunrise"), and (ii) pre-petition secured lenders (the "Lenders"), where the winning and only bid was part cash and part credit bid. The Third Circuit rejected the Estate's argument that the sale should not have been approved because the secured debt alleged by the Lenders that formed approximately 73% of the purchase price (the cash component was only approximately 27%) should have been (i) recharacterized as equity, (ii) deemed unsecured, or (iii) equitably subordinated.
Continue Reading Questions & comments