New Cases For the Week of March 28, 2011 - April 1, 2011

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April 1, 2011

Case

Court

Holding

CDX Liquidating Trust v. Venrock Associates
(DBN)
7th Cir. Under Delaware law, when a director is sued for breach of fiduciary duty, and the operation of the business judgment rule is rebutted by the plaintiff, the burden of proof on causation (i.e., the need to disprove causation) is on the director, not on the plaintiff.
     
March 31, 2011

Case

Court

Holding

In re PRS Insurance Group
(DBN)
Bankr. DE

Post-confirmation, the bankruptcy court may only exercise jurisdiction where a claim has a close nexus to the bankruptcy plan or proceeding" and the matter at issue affects the interpretation, implementation, consummation, execution, or administration of a confirmed plan or incorporated litigation trust agreement. The mere potential to increase the assets of a post-confirmation trust is insufficient to establish the required close nexus.

An post-confirmation action by a debtor/insurance company against other insurance companies for for breach of two reinsurance agreements and bad faith refusal to pay claims was not a core proceeding. In fact, the bankruptcy court may lack even "related to" jurisdiction over the action, since it arose in a post-confirmation context.

     
March 28, 2011

Case

Court

Holding

In re: Lyondell Chemical Company and Millennium Custodial Trust
(DBN)
Bankr. SD NY

A confirmed plan which had an exculpation provision that barred liability for exit finance activities, except "for acts or omissions constituting willful misconduct or gross negligence or bad faith as determined by a Final Order,"created exclusive jurisdiction in the Bankruptcy Court over any such suits related to the exit financing activities. Although the confirmed plan contained a provision negating bankruptcy court jurisdiction over enforcement of the exit finance documents, the suit at issue here was for tortious interference in a putative contract related to the exit financing, not for enforcement of the exit finance documents.

A lender asserted that a lead bank and the debtor breached an obligation of good faith when no part of the exit financing was allocated to the lender. The lender's claim was barred as to the debtor by the failure of the lender to file an administrative claim before the bar date.

The bankruptcy court's confirmation finding of "good faith" as to the lead lender was limited to 11 USC 1125(e) (good faith in solicitation of votes), and had no bearing on the lender's good faith as to the excluded loan pool participant.

   

 

 
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