|
New Cases For the Week of June 14 2004 -
June 18, 2004
Brought to you by BKINFORMATION.COM
- The Source for Business Bankruptcy Information on the Internet
|
June
18, 2004
|
|
Case
|
Court
|
Holding
|
In
re HA-LO Industries, Inc.
(DBN Subscription Required) |
Bankr.
N.D. Ill. |
The
bankruptcy exception to an
insured versus insured
exclusion in a D&O policy
applies to a debtor in
possession.
In
general, if an insurer does
not breach the insurance
contract, the insured must get
the insurer's consent before
settling a claim. An
insurer does not breach a
policy merely by providing
defense costs under a
reservation of rights.
However, once an insurer
reserves rights and takes the
position that coverage does
not apply, a breach has
occurred and the insured can
enter into a reasonable
settlement without the
insurer's consent. |
|
|
|
|
June
17, 2004
|
|
Case
|
Court
|
Holding
|
In
re Harford Sands Inc.
(DBN Subscription Required) |
4th
Cir. |
The
Bankruptcy Code establishes a
burden-shifting framework for
proving the amount and
validity of a claim. The
creditor's filing of a proof
of claim constitutes prima
facie evidence of the amount
and validity of the claim. The
burden then shifts to the
debtor to object to the claim.
The debtor must introduce
evidence to rebut the claim's
presumptive validity. If the
debtor carries its burden, the
creditor has the ultimate
burden of proving the amount
and validity of the claim by a
preponderance of the evidence.
The creditor's burden is
heightened when it is an
"insider" of the
debtor. The Code defines an
"insider" as, among
other things, the relative of
a director, officer, or person
in control of the debtor
corporation. An insider's
dealings with a bankrupt
corporation are ordinarily
subject to rigorous or strict
scrutiny. In such a situation,
the burden is on an insider
claimant to show the inherent
fairness and good faith of the
challenged transaction.
The bankruptcy court did not
err in disallowing the claim
of insiders. |
In
re NorthWestern Corp.
(DBN Subscription Required) |
Bankr.
De. |
Where
a creditor failed to
articulate a fraudulent
transfer claim against the
debtor prior to expiration of
the bar date, the creditor is
not entitled to relief from
stay to prosecute such a
claim. |
In
re NorthWestern Corp.
(DBN Subscription Required) |
Bankr.
De. |
Where
legal issues are within the
authority of the SEC, but will
also be raised in connection
with an imminent confirmation
hearing, creditors are not
entitled to relief from stay
to commence a proceeding
before the SEC. |
In
re NorthWestern Corp.
(DBN Subscription Required) |
Bankr.
De. |
Where
creditors articulated their
fraudulent transfer claim
against the debtor in their
timely proof of claim and
preserved such claim in the
underlying State court
litigation, they are entitled
to relief from stay to
litigate such claim. |
In
re Whitcomb
(DBN Subscription Required) |
Bankr.
E.D. Ark. |
To
be a "debtor engaged in
business" as that term is
defined under 11 USC s 1304(a)
requires that the debtor be
self-employed AND incur trade
credit. If both prongs are not
met, the debtor is not
required to file operating
reports as required under s
1304(c). |
|
|
|
|
June
16, 2004
|
|
Case
|
Court
|
Holding
|
Fadayiro
v. Ameriquest Mortgage Co.
(DBN Subscription Required) |
7th
Cir. |
The
bankruptcy rule governing the
requirements for an effective
notice of appeal is more
demanding than the counterpart
rule in the federal appellate
rules. |
|
|
|
|
June
15, 2004
|
|
Case
|
Court
|
Holding
|
In
re JWJ Contracting Co., Inc.
(DBN Subscription Required) |
9th
Cir. |
Creditor's
acceptance of what turned out
to be dishonored check, in
exchange for new value given
to debtor, transformed what
would have been
contemporaneous exchange into
avoidable credit transaction |
In
re Northern Merchandise, Inc.
(DBN Subscription Required) |
9th
Cir. |
Debtor's
grant of security interest to
bank that made loan to
debtor's shareholders was not
fraudulent conveyance, where
debtor received benefit from
loan, resulting in no net loss
to debtor's estate or to funds
available to unsecured
creditors. |
Heller
Financial, Inc. v. Prudential
Insurance Company of America
(DBN Subscription Required) |
7th
Cir. |
Where
a bank which was a member of a
bank lending group involved in
a loan facility containing
both a term and a revolving
loan received collateral
proceeds from a bankruptcy
sale, the members of the bank
group were each entitled to
their pro rata share of the
proceeds with no priority
accorded to one type of loan
over the other. |
In
re Vectrix Business Solutions,
Inc.
(DBN Subscription Required) |
Bankr.
N.D. Tex. |
A
Texas court will honor a
contractual choice of law
provision unless (i) the
chosen state has no
substantial relationship to
the parties to the transaction
and there is no other
reasonable basis for the
parties’ choice or (ii) the
law of the chosen state
violates a fundamental policy
of the State of Texas.
Where
parties to a contract agreed
that New York law would apply,
and where New York law permits
parties to contractually limit
the limitations period for
actions under the contract to
one year, the defendant was
not entitled to summary
judgment when an action was
brought after one
year. Texas law allows
contractual shortening of
limitations periods to two
years, and enforcing New York
law would violate Texas public
policy. |
In
re All Trac Transportation,
Inc.
(DBN Subscription Required) |
Bankr.
N.D. Tex. |
Where
trial counsel's strategy of
blaming the debtor's demise
entirely on a stay violation
claim resulted in excessive
time and money spent in
litigation, the Court reduced
requested fees from $437,00 to
$68,000. |
|
|
|
|
|
|
|