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the lenders and new non-purchase money obligations for the debtors. When the lenders assigned their claims, the court concluded, the lenders held nothing more than general, nonpriority claims entitled to the same pro rata distribution with the other liquidating trust beneficiaries. And that is all that the current claim holders could receive by way of the assignment.
* Kara Homes, Inc. v. Century Kitchens, Inc. (In re Kara Homes, Inc.), 374 B.R 542 (Bankr. D.N.J. Aug. 2007) (Kaplan, J.)
Subcontractors could not perfect liens post-petition by completing the process under state law. Under the bankruptcy court's interpretation of New Jersey law, subcontractors asserting liens against residential home builders must first file notices of unpaid balances (NUB's) with the county clerk and then seek a determination of an arbitrator regarding the subcontractor's compliance with the statute and ability to assert valid liens. The chapter 11 debtors in this case were in the business of constructing residential homes and had contracted with several subcontractors pre-petition. At issue was the validity of the subcontractors' liens against the debtors under state law. The court held that the significance of completing this entire process was more than a matter of perfection, "it goes to the heart or creation of the lien and/or interest." Thus, the court concluded that the defendants who had not sought arbitration before the commencement of the case had no "interest in property" or valid liens against the debtors. Accordingly, those creditors were stayed from completing the state law process because doing so, said the bankruptcy court, would amount to the creation of a lien as a direct violation of the automatic stay. See 11 U.S.C. SS 362(b)(3), 546(b).
* Highland Capital Mgmt., LP v. Chesapeake Energy Corp. (Matter of Seven Seas Petroleum, Inc.), 522 F.3d 575 (5th Cir. Mar. 2008) (King, J.)
34
* LaSala v. Bordier et Cie, 519 F.3d 121 (3d Cir. Mar. 2008) (Pollak, J. )
Securities Litigation Uniform Standards Act (SLUSA) did not preempt the litigation trust's derivative claims because derivative claims belong to the corporation. The debtor was a thriving public technology company that crumbled after its directors "pumped and dumped" the debtor's stock. As part of a settlement incorporated into the debtor's confirmed chapter 11 liquidating plan, stockholders and stock purchasers transferred their derivative claims for aiding-and-abetting breaches of fiduciary duties to a litigation trust for prosecution of those claims. Additionally, for convenience, the stockholders transferred their individual Swiss money-laundering claims into the trust for simultaneous prosecution. The defendant moved to
34 Hon. Louis H. Pollak, Sr. District Judge, U.S. District Court for the Eastern District of Pennsylvania, sitting by designation.
