All items from Delaware Bankruptcy Litigation

Savient Pharmaceuticals, Inc. (“Savient”) filed chapter 11 petitions for bankruptcy on October 14, 2013. Savient filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware.  According to the company’s bankruptcy petition, Savient heads in to bankruptcy with $73 million in assets and $260 million in liabilities.  The company’s origins go back to 1980 when it started under the name Bio-Technology General Corp and changed its name to Savient in 2003.  See Declaration of Savient’s CFO in Support of First Day Pleadings (the “Declaration” or “Decl.”) at *3.  Savient describes itself as a “specialty biopharmaceutical company” which focuses its business on the sale of Krystexxa throughout the United States and around the world.  Decl. at *4.  Krystexxa is a drug used to treat patients suffering from “Refractory Chronic Gout,”  a form of arthritic condition.  Id.

Posted 49 weeks 5 days ago

Last week, Charles M. Forman, acting as Chapter 7 Trustee (the “Trustee”) for Open Range Communications (“Open Range”) began filing complaints to recover what the Trustee contends are avoidable preferences. The Trustee filed the preference actions in the Delaware Bankruptcy Court and argues that the transfers, or payments, received by various defendants are avoidable and subject to recovery under 11 U.S.C. § 547 and 548 of the United States Bankruptcy Code. This post will look at the Open Range bankruptcy proceeding, why the company filed for bankruptcy as well as key developments during the course of the bankruptcy proceeding.
Open Range is a Delaware corporation based out of Colorado. The company was founded in 2004 in order to provide broadband access to areas of the country that are underserved. See Open Range’s Declaration in Support of First Day Motions (the “Decl”) at *2. In 2009, Open Range executed a $267 million Loan and Security Agreement which it intended to use over a five year period to build broadband networks in over 500 communities in 17 states. Decl. at *3.
In order to obtain wireless spectrum, in 2007 Open Range entered into a Spectrum Manager Lease with Globalstar Licensee LLC (“Globalstar”). After entering into the Spectrum Manager Lease, Globalstar experienced problems retaining the spectrum which Open Range intended to use for its services. Spectrum availability was critical to Open Range’s success as its loan agreement to fund operations was contingent on the continued availability of the wireless spectrum. Decl. at *3.

Posted 50 weeks 6 days ago

On October 1, 2013, Nirvanix, Inc. (“Nirvanix”) filed a chapter 11 petition for bankruptcy in the United States Bankruptcy Court for the District of Delaware. Nirvanix describes itself as a provider of “enterprise-class cloud storage services.” See Declaration of Nirvanix’s CEO in Support of Chapter 11 Petition and First Day Motions at *2. Nirvanix’s cloud storage services fall in to two categories: a cloud file system and a cloud storage network. Under the Nirvanix Cloud File System, the company provides software capable of handling “millions of users and billions of files in a single global namespace.” Decl. at *2. The Nirvanix Cloud Storage Network offers eight data centers that allow customers to store data within close proximity and access certain redundancy levels for data storage. Decl. at *2-3.
In addition to data storage services, Nirvanix offers security safeguards at the user level and physical data center level. Decl. at *3. Security offerings include password, token-based authentication and encryption services. The company’s physical storage centers are located globally in “Carrier Class-III facilities” which utilize financial-grade safeguard procedures and access. Decl. at *3. The company’s eight data storage facilities are located in the U.S. and around the world. Decl. at *4.
Business Operations

Posted 51 weeks 5 days ago

On Monday, Fresh & Easy Neighborhood Market (“Fresh & Easy”) filed chapter 11 petitions for bankruptcy in the United States Bankruptcy for the District of Delaware. Fresh & Easy is a grocery chain with stores in California, Nevada and Arizona. See Fresh & Easy’s Declaration in Support of First Day Motions and Applications (the “Declaration” or “Decl.”) at * 2. Founded in 2006, Fresh & Easy experienced rapid growth, opening 200 stores by 2012. The company describes its grocery business as “offering healthy and wholesome foods, including prepared foods at affordable prices.” Id.
Fresh & Easy operates multiple types of retail stores. Its largest stores are approximately 10,000 square feet, while its second largest stores are generally 7,000 in size. These “large footprint” stores are intended to provide shoppers with a one-stop location for weekly shopping. In addition to the large retail stores, Fresh & Easy also operates 3,000 square foot “market concept” stores which offer more convenience-based shopping and fresh meal products. Decl. at *3. The company currently operates 167 store locations, some of which are owned outright by Fresh & Easy while the others are operate through ground or store leases.

Posted 51 weeks 6 days ago

In a 14 page decision signed September 30, 2013, Judge Walsh of the Delaware Bankruptcy Court provided a primer on one of the limitations of standing provided in the bankruptcy code in his opinion granting a motion to dismiss.  Judge Walsh’s opinion is available here (the “Opinion”).
On May 21, 2004, the Circuit Court for Montgomery County, Maryland entered four separate judgments pursuant to a civil action against Richard and Graciela Redden (“Debtors”).  All four judgments were transferred on July 15, 2004 to the Superior Court of Delaware in New Castle County, at which time they became judgment liens against the primary residence of Debtors.
On August 12, 2004, the Debtors filed a joint Chapter 7 bankruptcy petition.  The order of discharge was entered on September 2, 2005.  Their case was reopened and they filed a complaint to avoid and recover a preferential transfer from one of the four judgment creditors.  The Court granted the Debtors motion to avoid the judgment lien and the case was again closed on October 29, 2006.  The other three judgment liens remained outstanding.

Posted 1 year 8 hours ago

On September 13th, the Liquidating Trustee (the “Trustee”) in the Graceway Pharmaceuticals (“Graceway”) bankruptcy filed preference complaints against approximately 25 different defendants. The Trustee is seeking to avoid and recover what he contends are avoidable preferences under section 547 of the United States Bankruptcy Code. 
Graceway filed chapter 11 petitions for bankruptcy on September 27, 2011.  The company’s origins date back to 2006 when it acquired portions of a pharmaceutical business from 3M.  Through the purchase, Graceway became what it described as a leader in the specialty pharmaceuticals market.  By 2008, the company’s net sales rose to over $340 million and continued to rise through 2009.  In 2010, Graceway began experiencing declining sales and net revenues.  The company attributed its poor performance to the recession and unfavorable patent litigation.
Going in to bankruptcy, Graceway planned to sell substantially all of its assets pursuant to section 363 of the Bankruptcy Code.  Once in bankruptcy, the Delaware Bankruptcy Court confirmed Graceway’s Joint Plan of Liquidation (the “Liquidating Plan”).  Under the Plan, Graceway entered into a Liquidating Trust Agreement wherein the Trustee could liquidate assets and distribute the proceeds.  The Trustee is also responsible for pursuing avoidable preference claims. 
The Graceway bankruptcy is before the Honorable Peter J. Walsh.  The law firm DLA Piper represents the Trustee and Plaintiff in the Graceway preference actions.

Posted 1 year 3 days ago

Earlier this month, Pirinate Consulting Group LLC, in its capacity as Litigation Trustee (the “Trustee”) of the NewPage Creditor Litigation Trust, began filing complaints in the Delaware Bankruptcy Court seeking the avoidance and recovery of what the Trustee alleges are preferential transfers.  All total, the Trustee filed over 780 preference complaints. In 2011, I wrote a blog post on the commencement of the NewPage bankruptcy.  As a follow-up to my prior post, this post will look at events that have transpired since NewPage first filed for bankruptcy, as well how the Trustee would like to proceed now that it has commenced the preference complaints. 
NewPage Corporation (“NewPage”) filed chapter 11 petitions for bankruptcy on September 7, 2011.  Prior to bankruptcy, NewPage produced coated paper used in magazines, brochures, catalogs and textbooks.  The company operated mills located in Kentucky, Maine, Maryland, Michigan, Minnesota, Wisconsin and Canada.  The company filed for bankruptcy, citing a drop in demand for coated paper.  NewPage’s paper products were tied to demand for advertising and print media products.  With the onset of the recession in 2008, the advertising and print media markets experienced substantial drops in demand, which carried over to paper suppliers such as NewPage.
The Bankruptcy Proceeding

Posted 1 year 3 days ago

On September 9, 2013, Furniture Brands International (“Furniture Brands”) and various related entities filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. Faced with a slowing economy and mounting debt, Furniture Brands hopes to sell some most of its assets through a section 363 bankruptcy auction. Relying on papers filed by Furniture Brands with the Bankruptcy Court, this post will look at Furniture Brands’ business, why the company filed for bankruptcy, the company’s finances and what the company hopes to achieve while in bankruptcy.
Business Operations

Posted 1 year 2 weeks ago

On August 30, 2013, Longview Power, LLC, and various related entities (collectively, “Longview”), filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware.  According to the Declaration of Longview’s CEO (the “Declaration” or “Decl.”), Longview was formed in 2003 for the purpose of building and operating a 700 megawatt coal-fired power plant in Maidsville, West Virginia.  Decl. at *2.  Longview contends that when operating at full capacity, its power plant is one of the most efficient in the country, having some of the lowest air emissions in the United States.  Id
Longview and its affiliates operate in two primary sectors: (i) electricty generation; and (ii) coal mining and processing.  Decl. at *5.  The company operates its power plant through Longview Power and its coal mining operations through Mepco Holdings, LLC.  Although Longview was formed more recently to operate the power plant, Mepco was formed over 50 years ago and describes itself as “one of the largest independent coal companies in North Appalachia.”  Decl. at *2.  Approximately half of Mepco’s annual coal production is sold to Longview through an intercompany supply contract.  Decl. at *2-3.  From July 1, 2012 to June 30, 2012, Longview Power’s revenues totaled $106 million while Mepco’s revenue totaled $149 million.  Id.
Longview’s Financials

Posted 1 year 3 weeks ago

On June 10, 2013, Exide Technologies (“Exide” or “Debtor”) filed a petition for bankruptcy under Chapter 11 of the United States Bankruptcy Code. Exide filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware. With operations in over 80 countries, Exide describes itself as “a global leader in stored electrical energy solutions and one of the world’s largest producers and recyclers of lead-acid batteries.” See Declaration of Exide’s CFO in Support of Chapter 11 Petitions and First Day Pleadings (the “Decl.”) at *2-3. 
Exide’s business falls into two general categories – transportation and industrial. On the transportation side, Exide manufactures and sells batteries used in cars, trucks, recreational and marine vehicles. In its industrial divisions, the company offers motive and network power batteries. Motive power batteries are used in equipment such as electric forklifts, floor cleaning equipment and the like. Network power batteries, on the other hand, power systems used in telecommunications, computers and health care industries, among others. Decl. at *3. Exide employs over 3,600 employees in the U.S., 1,100 of which are salaried and 2,500 are paid hourly. Decl. at *4. 

Posted 1 year 15 weeks ago