All items from Delaware Bankruptcy Litigation

Introduction
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 49 weeks 5 days ago

Introduction
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.
Background
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 49 weeks 6 days ago

Summary
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”).
Background
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 50 weeks 1 day 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 50 weeks 4 days ago

Introduction
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. 
Background
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 50 weeks 4 days ago

Introduction
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 5 days ago

Introduction
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 1 week ago

Introduction
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 13 weeks ago

Introduction
On April 24, 2013, Robert S. Bernstein, Plan Administrator for the Berkline/BenchCraft bankruptcy estates, began filing complaints with the Delaware Bankruptcy Court seeking to recover what he contends are preferential transfers.  For those not familiar with preference actions, Bernstein contends that certain payments, or "transfers", made to creditors in the months prior to the Berkline bankruptcy are subject to avoidance and recovery pursuant to sections 547 and 550 of the Bankruptcy Code.  According to court papers filed by Bernstein, a pretrial conference is scheduled for July 9, 2013 at 10:30 a.m..
Background
Berkline and various related entities filed chapter 11 petitions for bankruptcy on May 2, 2011.  According to the Declaration of Berkline's Chief Restructuring Office (the "Decl."), Berkline was a "leading North American designer and manufacturer of upholstered and reclining furniture."  Decl. at *2. Berkline manufactured home theater seating, sofas, love seats and sectionals which were sold in furniture stores, department stores, "big box" stores and on the internet.  Two of the company's brands included the "Berkline" and "Benchcraft" lines of furniture.  Id.
Reasons for Bankruptcy



Posted 1 year 18 weeks ago

Introduction
On April 24, 2013, Synagro Technologies ("Synagro") and various affiliates filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware.  Synagro recycles biosolid and organic materials generated by municipal and industrial waste water treatment centers.  The company describes its services to include "drying and pelletization, composting, incineration, alkaline stabilization, land application, collection and transportation, regulatory compliance, dewatering, facility cleanout services and product marketing."  See Synagro's Declaration in Support of Chapter 11 Petitions and First Day Pleadings (the "Decl.") at *3-4.
Operations



Posted 1 year 19 weeks ago