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* Magten Asset Mgmt. Corp. v. N.W. Corp. (In re N.W. Corp.), 372 B.R. 684 (D. Del. Aug. 2007) (Farnan, J.)
Bankruptcy court was justified in using 105(a) powers to correct an omission in the chapter 11 plan. The reorganized debtor sought to enter into a post-confirmation merger, but the plan did not account for handling the reorganized debtor's common stock which was held in a retention account for future payment of disputed claims. To fix this omission in the plan, the bankruptcy court used its inherent powers to order the transfer agents of the retention account to tender all of the reorganized debtor's stock to the merging entity and then to make distributions of the cash proceeds to the disputed claim holders as specified by the plan. In other words, certain security holders who would have received shares of the reorganized debtor's common stock would now receive the cash equivalent instead. The district court affirmed, holding that the bankruptcy court's order was a narrow order that neither authorized a merger nor modified the confirmed plan. Furthermore, the court held that the security holders failed to demonstrate how receiving cash rather than stock treated them unfairly in violation of section 1123(a)(4).
* In re Tubular Technologies, L.L.C., 372 B.R. 820 (Bankr. D.S.C. July 2007) (Waites, J.)
Using estate funds to pay post-confirmation litigation costs was in the estate's best interest.
The bankruptcy court approved the employment (on a contingency basis) of special litigation counsel under section 327(e) to pursue malpractice claims against the debtor's former counsel. Over an objection from an administrative claim holder, the court granted the liquidating trustee's motion to advance estate funds as necessarycosts of litigation. The court characterized the motion as a request to use estate property under section 363(b)(1) and applied the appropriate standards (the trustee had filed the motion under section 364(c)(1), as a request to incur debt). Said the court, the trustee had a "good business reason" for advancing the costs of the malpractice action because the likelihood of recovery from the litigation outweighed the cost to the estate: without a recovery from the litigation, the estate would have been administratively insolvent.
* Fox v. Koplik (In re Perry H. Koplik & Sons, Inc.), 382 B.R. 599 (Bankr. S.D.N.Y. Feb. 2008) (Gerber, J.)
Certified Public Accountant's testimony was stricken to the extent that the testimony contained professional views rather than lay perceptions. The litigation trustee sued the reorganized debtor's former insiders for breaches of fiduciary duties. The trustee offered evidence of a CPA who had studied the debtor's affairs, including the defendants' activities. Because the trustee did not offer the testimony as an expert opinion, the defendants moved to
(S.D.N.Y. Feb. 2008) (Cote, J.).
