New Cases - Week of September 5, 2011

New Cases For the Week of September 5, 2011 - September 9, 2011

September 9, 2011
In re Sunset Aviation, Inc. (DBN)	Bankr. DE	A substantive consolidation order is not automatically retroactive. Where there is no language in the operative order(s) suggesting that retroactivity, such effect will not be assumed. Thus, for preference look back purposes, the "petition date" of substantively consolidated debtors was not thee earliest petition date among the debtors, as alleged by the trustee. The applicable date was the date that the debtor who actually made the payment filed for bankruptcy.
PNH, Inc. v. Alfa Laval Flow, Inc. (DBN)	OH Sup. Ct.	The Bankruptcy Code preempts state-law claims that allow the recovery of damages for misconduct committed by a litigant during a bankruptcy court proceeding.

September 8, 2011
In re Herald, Primeo and Thema Securities Litigation (DBN)	SD NY	The court refuses to even tentatively approve as "fair, reasonable or adequate" a $62.5 million class litigation settlement involving Madoff due to the following "obvious deficiencies": (i) payment of unliquidated future legal fees and expenses from the settlement amount coupled with inadequate provisions for notifying, and receiving approval from , class members for such fee applications, (ii) the set aside of $10 million from the settlement amount to fund litigation against non-settling parties and (iii) the requirement that a different court in another jurisdiction must enter an order confirming the "enforceability and res judicata effect" of the settlement.

September 6, 2011

In re Longview Aluminum, L.L.C.
(DBN)

7th Cir.

The question of insider status is regarded as a mixed question of law and fact, which is reviewed de novo. There are two approaches to the determination of "insider" status: (i) the "similarity" approach and (ii) the "closeness" approach.

The similarity approach compares the position held by a non-statuutory insider with the list of positions creating statutory insiders and attempts to analogize the non-statutory insider's position with statutory positions. If the court finds sufficient "similarity," the putative insider is viewed as a statutory insider.

The closeness approach encompasses anyone with a sufficiently close relationship with the debtor such that his conduct is made subject to closer scrutiny than those dealing at arm's length with the debtor.

The bankruptcy court did not err in using the similarity approach to determine that a "member" of an LLC was similar to a statutory "director" and thus was an insider. The court did not err in choosing not to analyze whether the LLC member was a non-statutory insider via control factors. The court's use of the alternative "similarity approach" was valid.