New Cases - Week of August 30, 2004

September 2, 2004
Case	Court	Holding

In re Mirant Corporation et. al. (DBN Subscription Required)	Bankr. ND TX	Nothing in the language of this provision suggests Congress intended to prevent a court from granting to an examiner a specific power or an aggregation of powers.

September 1, 2004
Case	Court	Holding

In re Imperial Tooling and Manufacturing, Inc.
(DBN Subscription Required)

Bankr. ND TX

Under Texas law, the intent to hinder or delay or defraud any creditor are three separate elements. Each one on its own may make a transfer fraudulent. Intent to hinder, delay or defraud may be established by circumstantial evidence.

Proof that a creditor obtained a secured position after its loan to a debtor and transformed itself from an unsecured creditor to a secured creditor can constitute inequitable conduct warranting equitable subordination.

The Court declines to approve a $20,000 settlement in light of the trustee's likelihood of prevailing in the litigation.

August 31, 2004
Case	Court	Holding

Almeroth v. Innovative Clinical Solutions, Ltd. (DBN Subscription Required)	Bankr. DE	Any privilege pertinent to board of directors' meeting minutes was waived when the minutes were made available to a third party in connection with due diligence review for a prepackaged plan of reorganization. It is irrelevant whether the third party actually reviewed the minutes. Merely making the minutes available waives the privilege.
In re Boan (DBN Subscription Required)	Bankr. CO	§ 726(a) is an exception to the general rule under Colorado law—and common law—that a creditor may apply payments on a debt in any way it pleases.
In re Searcy (DBN Subscription Required)	Bankr. W.D. Ark.	Granting a motion to reinstate, which is actually a motion to set aside an order of dismissal under Rule 9024, does not retroactively reinstate automatic stay during period of time case was dismissed.

August 30, 2004
Case	Court	Holding

In re Kmart Corporation (DBN Subscription Required)	7th Cir.	The bankruptcy court did not err in denying a motion to file a late claim where the claim was filed one day late and 10 months before the debtor filed its plan.
In re Hedged-Investments Associates, Inc. (DBN Subscription Required)	10th Cir.	When a putative loan to a corporation is recharacterized, the courts effectively ignore the label attached to the transaction at issue and instead recognize its true substance. The funds advanced are no longer considered a loan which must be repaid in bankruptcy proceedings as corporate debt, but are instead treated as a capital contribution. The doctrine of equitable subordination, by contrast, looks not to the substance of the transaction but to the behavior of the parties involved. The funds in question are still considered outstanding corporate debt, but the courts seek to remedy some inequity or unfairness perpetrated against the bankrupt entity's other creditors or investors by postponing the subordinated creditor's right to repayment until others' claims have been satisfied.
Stark v. Sandberg, Phoenix & von Gontard, P.C. (DBN Subscription Required)	8th Cir.	The district court erred in vacating an arbitration award against a forclosing creditor for $6,000,000 punitive damages.