All posts in Chapter 11

Toys R Us Files Chapter 11

U.S. Bankruptcy Court
Eastern District of Virginia (Richmond)
Bankruptcy Petition #: 17-34665-KLP

Assigned to: Keith L. Phillips
Chapter 11

Date filed:   09/19/2017
Deadline for filing claims (govt.):   03/19/2018


Toys R Us, Inc.
One Geoffrey Way
Wayne, NJ 07470
Tax ID / EIN: 22-3260693

represented by Peter J. Barrett
Kutak Rock L.L.P.
901 East Byrd Street
Suite 1000
Richmond, VA 23219-4071
Fax : 804-783-6192

Prof. Dan Schechter Comments on Sunnyslope – Says Decision is “Shockingly Wrong!”

Below are the comments of Prof. Dan Schechter (from my alma mater, Loyola Law) to the 9th Circuit’s en banc ruling in In re Sunnyslope Housing Ltd. Partnership, 818 F.3d 937 (9th Cir. 2017).  The due date for the petition for cert is now September 22, 2017.  The bank’s attorney is Craig Goldblatt from the Wilmer Hale firm in Washington DC.

My thoughts on why the 9th Circuit got Sunnyslope right are here, here and here.   The en banc decision is here.

Prof. Schechter commented on the Insolvency Law e-Bulletin:

AUTHOR’S COMMENT: This decision is shockingly wrong.  If the lender in this case seeks and obtains certiorari (a big “if”), I predict reversal by the Supreme Court. (As long as I am making rash predictions, I also predict a 6-3 decision, with Justice Breyer joining the majority.) Read more…

9th Cir En Banc Gets It Right in Sunnyslope

The 9th Circuit en banc panel has reversed the three judge panel in Sunnyslope thankfully.  The issue was how to value a building that had restrictive covenants that reduced the value of the property to the debtor.  The en banc panel said that the words in section 506(a) that the value is “determined in light of the purpose of the valuation and of the proposed disposition or use of such property,” have meaning.  The previous panel and the dissent to the en banc ruling tried to squeeze the Supreme Court ruling on valuation of a truck in Rash into the valuation of a building with affordable care covenants.

It took me a while to understand the Rash argument.  I had a hard time getting past what seemed to be the obvious and straight forward language of the code.   Read more…

Here comes the split re: trustee reach back for 10 years!

The circuit split starts!  Following up on my post below, this 10 year reach-back period for trustees is starting to garner some traction!  Judge Pappas, one of the nicest and astute judges I have met, recently issued an extremely thorough 76-page opinion siding with the Florida bankruptcy judge that allowed the trustee to step in the shoes of the IRS and reach back much farther than the 4-year limitation to avoid a fraudulent transfer.

I love it when courts cite nullum tempus occurrit regi meaning “no time runs against the king” (gives me goosebumps) which implies that the United States (i.e. IRS) is not bound by state statutes of limitation in enforcing its rights.

Read more…

Chapter 11 Doesn’t Have To Be Quite So Paper Intensive

My oldest son asked me to look up a case in North Dakota.  A related case called J&J Oilfield Services, Inc. caught my eye.  The docket was some 479 items resulting in a confirmed plan.  So the case is nice and complicated.  But take a look at the employment app debtor’s counsel filed.  Employ App North Dakota  One page!  And one page for the Statement of Disinterestedness.  The Motion for Final Decree is here.  Final Decree North Dakota  One page.  It doesn’t have to be that complicated.

Sunnyslope Oral Argument En Banc Set for January 17, 2017: 3:30 pm

My discussion, What is the Value of Property in a Chapter 11 Plan? The 9th Circuit Goofs, of the debacle known as Sunnyslope is here and here.  Thankfully, the 9th Circuit decided to rehear the matter en banc.  The en banc hearing will take place in San Francisco on January 17, 2017 at 3:30 pm.  See you there?

Edict From Judge Maureen Tighe

Judge Maureen Tighe announced in court today that she is going to start sanctioning attorneys and chapter 11 debtors when the debtor does not appear personally at the Status Conference – per her status conference order.

5 NEW Forms for Individual Chapter 11 Cases in Judge Zurzolo Cases

Effective August 1, 2016,the following forms can be used in individual Chapter 11 cases in front of Judge Zurzolo:

(1) Disclosure Statement and Plan (combined document) [I WORKED ON THESE WITH HIM!]
(2) Notice of Hearing on Adequacy of Disclosure Statement
(3) Motion to Approve Adequacy of Disclosure Statement
(4) Notice of Dates and Deadlines Related to Confirmation of Plan
(5) Motion to Confirm Plan of Reorganization

Link to the Judge’s website here.

Last Add – Sunnyslope Goof Up

There was some serious discussion at one of the programs at the 9th Circuit Judicial Conference about Sunnyslope, more in the area of equitable mootness than in property valuation issues.   Someone reminded us that a confirmed plan in a corporate chapter 11 cannot be modified after it has been substantially consummated.  In Sunnyslope, everyone involved in the case agreed that the plan was substantially consummated.  The opinion says, ”the plan as approved by the bankruptcy court was substantially consummated, as all parties acknowledge.”  So it must be “unraveled,” – pitched out.   The court (the two person majority) concluded, “As a result, the plan of reorganization confirmed by the bankruptcy court and affirmed by the district court must be set aside.”  So I guess it will not be modified, the parties will simply start over four years later.     Read more…

LACBA Program: Successor Liability, 363 Sales, and Chapter 11

Successor Liability, 363 Sales, and Chapter 11: Buyers…

The panel will discuss the issue of successor liability in the context of a sale under 11 U.S.C. § 363 from the perspective of a buyer, seller, and creditors.

Program Title: 
Successor Liability, 363 Sales, and Chapter 11: Buyers, Sellers, and Creditors Beware!

Presented By:
Commercial Law & Bankruptcy Section

Thursday, July 28, 2016

Program Description:
The panel will discuss the issue of successor liability in the context of a sale under 11 U.S.C. § 363 from the perspective of a buyer, seller, and creditors.  The discussion will cover how to sell a business before the value is all gone, strategies to structure sales and asset transfers through plans and section 363 sales, exceptions to the “free and clear” rule, when a buyer may be liable for present or future claims of the debtor, rights and strategies of a purchaser facing successor liability, and methodology and considerations in attacking a buyer for successor liability.  The panel will also discuss key post confirmation jurisdictional considerations in evaluating what court may address these issues.

Hon. Julia W. Brand, United States Bankruptcy Court
Jeffrey I. Golden, 
Lobel Weiland Golden Friedman LLP
Whitman L. Holt,
 Klee, Tuchin, Bogdanoff & Stern LLP Read more…