Bankruptcy Newsletter
The Latest on Deepening Insolvency
By Ezra Cohen and
Vivieon Kelley
Some commentators have suggested that a recent decision by the Delaware bankruptcy court is contrary to other recent cases that prevent the trustee of a bankruptcy corporation from recovering damages for deepening insolvency that occurs after liquidation is inevitable. See Miller v. McCown De Leeuw & Co. (In re The Brown Schools), 386 B.R. 37 (Bankr. D. Del. April 24, 2008) (Walrath, B.J). However a careful reading of that opinion, as well as a review of the pleadings in the case, dispels that suggestion.
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Supreme Court Closes Door on Exemption from State Stamp Taxes for Pre-Confirmation Asset Transfers
By Richard Hagerty
The Supreme Court’s interpretation of Section 1146(a) was quite reasonable and indeed predictable after the Court granted certiorari to review the contrary interpretation of the Eleventh Circuit. As a result of the Court’s decision, it could be slightly more expensive for Chapter 11 debtors to dispose of assets in Section 363 sales prior to the confirmation of a Chapter 11 plan. However, it is doubtful that the Supreme Court’s decision will cause Chapter 11 debtors generally to delay assets sales until a plan can be confirmed. This is because the costs of carrying assets that need to be sold often far outweigh the amount of the state stamp tax.
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