BankruptcyProf Blog

Law Review Article - Chapter 11 Fees

What We 'Know' About Chapter 11 Cost is Wrong

Stephen J. Lubben
Seton Hall University - School of Law

November 30, 2010

Seton Hall Public Law Research Paper No. 1718047

Abstract:     
Among the collective wisdom about large corporate bankruptcy cases, the following points are almost undisputed: Longer chapter 11 cases cost more; Prepackaged chapter 11 cases cost less; Cases filed in New York or Delaware cost more; Fee examiners control the costs of big chapter 11 cases.

But each of these points is wrong, and in most cases entirely backward. And this article provides empirical evidence to show why.

Circuit Court of Appeals Cases from Last Week

United States Second Circuit, 02/07/2011
DISH Network Corp. v. DBSD N. Am., Inc., No. 10-1175
Chapter 11 plan confirmed and designation of votes of DISH Network Corporation as "not in good faith" under section 1126(e) where: 1) bankruptcy court's decision to designate DISH's vote as not having been cast in good faith and its treatment of its class's vote is appropriate; but 2) Sprint has standing to appeal the denial of its objection to the confirmation of the reorganization plan and the bankruptcy court erred in confirming the plan of reorganization.

United States Second Circuit, 02/08/2011
In re Adelphia Recovery Trust, No. 09-0799
Bankruptcy Court affirmed in part and reversed in part barring the Adelphia Recovery Trust from pursuing fraudulent conveyance claims against the appellee banks on res judicata and estoppel grounds.

United States Ninth Circuit, 02/10/2011
Barrientos v. Wells Fargo Bank, N.A., No. 09-55810
In an action alleging violation of section 524 must be brought by motion, not via an adversary proceeding.

Thanks to Findlaw.com. 

Suspension urged for lawyer who helped Judge Thomas Porteous lie in bankruptcy

"An advisory panel has recommended a 30-day suspension for the New Orleans lawyer who helped federal Judge Thomas Porteous of Metairie lie his way into bankruptcy proceedings. The report comes from a Louisiana Attorney Disciplinary Board hearing committee, which essentially held that Claude Lightfoot aided Porteous 'in conduct that a lawyer knows is criminal or fraudulent.' "

Read more here.

Program with Chapter 7 Trustees

Chapter 7 Trustee Panel: “Help Us Help You”
 
March 5, 2011
 
Presented by:
Central District Consumer Bankruptcy Attorneys Association
 
Speakers:
Chapter 7 Trustee Panel
from the Los Angeles, San Fernando Valley, Santa Ana and Riverside Divisions
 
Where:
Southwestern Law School
3050 Wilshire Boulevard
Westmoreland Building - 3rd Floor
Los Angeles, CA 90010

Parking is Free!
 
Times:
cdcbaa Membership Meeting: 10:15 am - 11:00 am
Program: 11:00 am - 1:00 pm
 
 2 Hours of MCLE Credit Provided – Limited Space

Cost: Free to cdcbaa Members
Non-Members: $250 (which includes one year membership in cdcbaa, admission to the annual Calvin Ashland Awards Dinner, and at least six more free MCLE Programs this year)

Sign up the day of the seminar with a check payable to cdcbaa or visit our website at www.bklawyers.org to remit payment via paypal.

"The Flag is Up" - Same Sex Married Couple Files Chapter 13 in Los Angeles.

Financially distressed same-sex CA married couple goes straight into bankruptcy by filing a joint Chapter 13 petition in the Los Angeles Division of the U.S. Bankruptcy Court for the Central District of California, on February 24, 2011.

In re Balas & Morales (husband and husband), 2:11-bk-17831-AA.  Debtors are represented by Peter M. Lively.

Peter M. Lively, JD, MBA
The Personal Financial Law Center * Culver City & Costa Mesa * 800-307-DEBT

Would-be Carvel heiress files Chapter 11

"First of all, it’s a “pro se” filing, which means there’s no attorney. Carvel could have done it herself, or perhaps she had a financial adviser prepare it.

Even more strange is that Carvel declares assets of $32 million and debt of $614,000. Normally, people with such an outlook don’t file for bankruptcy, but all her assets are listed as litigation claims."

Read more here.

US bankruptcy claims trading at 18-month low

"The number of U.S. bankruptcy claims that traded in January fell to the lowest level since July 2009 as more companies emerged from Chapter 11, according to data released on Tuesday."

Read more here.

Ex-Taylor, Bean exec pleads guilty in fraud case

"The former treasurer of bankrupt Taylor, Bean & Whitaker Mortgage Corp, Desiree Brown, pleaded guilty on Thursday to conspiracy for one of the biggest fraud cases so far stemming from the U.S. mortgage meltdown."

Read more here.

3 companies seek bankruptcy amid weak commercial real estate market

"The beleaguered Las Vegas commercial real estate market was hit with three more bankruptcies last week."

Read more here.

Bankruptcy for Las Vegas' BB King Blues Club owner

"The owner of the B.B. King's Blues Club in the Mirage hotel and casino on the Las Vegas Strip has filed for bankruptcy protection, court records show.

The filing comes as Las Vegas tries to recover after being hit hard in the recent economic downturn, hurt by declines in tourism and a glut of hotel rooms and casinos. Nevada also has one of the nation's highest residential foreclosure rates."

Read more here.

Bears’ Duerson had pending personal bankruptcy

"Former Chicago Bears safety Dave Duerson, who committed suicide last Thursday in Sunny Isles Beach, Fla., had filed for voluntary personal bankruptcy last September in a case that was still pending."

Read more here.

Bankruptcy Judge Clears Borders Store Closings

It's official.  Borders will be closing 200 of its superstores throughout the nation, including 35 here in California.  The doomsday list includes the Pasadena location, the Century City Mall store, and the Howard Hughes Center store. 

Call me a cynic, but I've been sensing the demise of brick and mortar bookstores for years.  Paying sticker price plus sales tax is rarely necessary anymore, as Amazon, the online demigod of retailers, has been able to cut its margins razor-thin and quickly gobble up huge portions of the market.  They won me over when I searched a favorite author to find out whether his new book had been published, and found not only that the book had been published a week earlier, but Amazon was selling it at half the MSRP.

Borders is the first to fall for good reason - an anachronistic business model and poor local management.  Borders only entered the online sales market in the last few years, long after Amazon and Barnes and Noble won the loyalty of most online customers.  They invested in huge DVD and music displays just as the world went digital.  Management seems to place a minimal focus on customer service.  I have no particular ire for Borders - I'm simply not surprised to hear of its cashflow problem. 

Brick and mortar bookstores will play a role in the American economy for the foreseeable future, if a shrinking role.  There's just something special about the smell of new books, and the chance to pick up and thumb through titles before you make a purchase.  Unfortunately for Borders, there's also something special about the chance to buy books that haven't been thumbed through by 20 people already.

Read more here.

List of Borders stores closing.

-CHH

JPMorgan says Lehman called assets "goat poo"

The bank has revised a lawsuit to include an allegation of fraudulent inducement to lend, asserting that Lehman and Barclay's knew that Chase's emergency loans would never paid back.

Read more here.

Bachelor Aaron Buerge: I'm in Bankruptcy, But Not Broke

The happily married former "Bachelor" star found true love over the course of the reality show in 2002 only to call it quits not one month later. In a somewhat insightful commentary on his debts, amounting to more than four times his assets, Buerge asserts, "I'm not in financial distress - nothing like that."

Read more here.

Giordano's Pizza, Famous Chicago Deep-Dish Chain, Files For Bankruptcy

Read more here.

More Problems for MERS

From: "Steve Smith" <sesmithesq@aol.com>
To: cdcbaa@yahoogroups.com
Sent: Tuesday, February 15, 2011 9:31:58 AM
Subject: [cdcbaa] Re: Big MERS decision

This is a follow-up piece on the decision, from the Wall Street Journal: http://blogs.wsj.com/developments/2011/02/14/us-bankruptcy-judge-questions-legal-claims-of-mers/
The actual holding of the case granted the MFR in favor of the movant, on the grounds that the prior judicial foreclosure ruling the party was trying to enforce was res judicata; the exciting part of the decision comes when the judge holds that not withstanding the ruling, in future cases where a party appears in court with a claim based on an assignment from MERS, they will be out of luck...this is the actual ruling: http://www.nyeb.uscourts.gov/opinions/reg/334499_41_opinion.pdf

Borders' First Day Motions

Here is the Declaration supporting the Borders' First Day Motions.  Tells you the structure of the company, what went wrong, the general plan.  I always find these fascinating.  Of course they have two stores in Manhattan which is why they filed there. 

Owner of unfinished Wyndham hotel files for bankruptcy

Read more here.

Seahawk to seek bankruptcy protection, sell assets

"Gulf of Mexico driller Seahawk Drilling Inc (HAWK.O) said it would file for bankruptcy protection and sell its 20 shallow-water rigs to bigger rival Hercules Offshore (HERO.O) for about $100 million."

Read more here.

Denny Hecker sentenced to 10 years

"U.S. District Judge Joan Ericksen Tuesday morning handed the 58-year-old former auto mogul a decade-long prison sentence, the maximum combined penalty for the two crimes — bankruptcy fraud and wire fraud conspiracy — to which he pleaded guilty in a Labor Day weekend deal with prosecutors."

Read the article here.