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First day financing order impacted the post-petition lenders' standing to object to the plan. The lenders provided financing under section 364(c)(1) which provided them with "super priority" claims. The debtor sold substantially all of its assets and filed a liquidating plan which did not provide for full payment to the post-petition lenders. The lenders objected, claiming that they held administrative expense claims which must be paid in full under the terms of the plan. See 11 U.S.C. S 1129(a)(9)(A) (2007). The court overruled the objection, concluding that, while the lenders held unsecured claims which must be paid before any administrative expense claims, the lenders' claims were not, by definition, administrative expenses. Without holding an actual administrative expense claim, concluded the court, the lenders lacked standing to object to the plan. See infra Parts III.A. & IV.D.
* In re Meridian Auto. Sys.-Composites Operations, Inc., 372 B.R. 710 (Bankr. D. Del. Aug. 2007) (Walrath, J.)
Critical vendor was ordered to disgorge $1.25 million. The court issued a critical vendor order, authorizing the debtor to pay certain critical vendors pursuant to post-petition agreements which, inter alia, required the vendors to disgorge these payments upon their failure to perform under the terms of the post-petition agreements. During the course of the bankruptcy case, one critical vendor began to request price increases on its goods, and the debtor summarily rejected these price increases. When the debtor withheld payments from the vendor, the vendor responded by refusing to ship goods to the debtor. A plan of reorganization was eventually confirmed, and weeks after the effective date of the confirmed plan, the debtor moved for the court to compel the vendor's compliance with the critical vendor agreement -- i.e., to disgorge the payments made under the agreement. The court granted the debtor's motion, holding that the vendor's price increases and refusal to ship goods constituted a breach of the critical vendor agreement. The court further held that the disgorgement claim was explicitly reserved by the plan and not released or waived by the debtor.
* In re Syroco, Inc., 374 B.R. 60 (Bankr. D.P.R. Aug. 2007) (Tester, J.)
Utility companies wishing to take advantage of BAPCPA provisions must not remain silent. In this case, the court explicitly declined to follow In re Lucre, Inc., 333 B.R. 151 (Bankr. W.D. Mich. 2005), which held that BAPCPA removed bankruptcy courts' ability to enjoin utility companies from shutting off debtors' services after 30 days. The bankruptcy court in this case found that such a conclusion created absurd results. Instead, the court extended the injunction against the silent utility companies -- those failing to respond to the debtor's offer of adequate assurances of payment. The court noted, however, that the utility companies could still request modification of the amount of assurance payments at any time upon request for notice and hearing, pursuant to section 366(c)(3)(A).
©2008 Leif M. Clark
