  |
  |
  |
    
  
   |
 | |||
|
|
|
|
| |||
the benefit of a lifetime warranty is limited to the Repair Warranty, or possibly, the applicable Lemon Law." Additionally, the court found that the sale order barred claims against Chrysler arising from the debtors' duty to warn plaintiffs of the defects. However, the court explained that a relationship between Chrysler and the plaintiffs could arise where Chrysler knew of the defects and serviced the defective vehicles, whereby Chrysler could have a duty to warn. But the court found that none of the claims were based on such a duty. The plaintiffs' claims were not based on actual personal injury. They all asserted loss of economic value based on their purchase of a defective vehicle. The court concluded that such claims were simply a "typical successor liability case[s] dressed up to look like something else, and [are] prohibited by the plain language of the bankruptcy court's [sale] Order."
vii. In re Residential Capital, LLC, 491 B.R. 73 (Bankr. S.D.N.Y. 2013)
Issue: Whether the debtors met their burden of showing that key employee incentive plans (KEIPs) for the debtors' executives was incentivizing rather that retentive.
Holding: The bankruptcy court held that the debtors met their burden of showing the $3.4 million KEIPs were properly characterized a performance-based incentive compensation plans, rather than insider retention plans subject to statutory limitations. The Bankruptcy Code provides strict restrictions a debtor's ability to make retention payments to insiders. The court explained that it looks to the circumstances in which a compensation package is proposed, as well as the structure of the package, in determining whether the Code's restrictions apply. Additionally, incentive-based compensation is not subject to the Code's restrictions. The court approved the KEIPs because the debtors' executives were working on a complex wind-up of the debtors, the compensation was "reasonable and consistent with industry standards," the creditors' committee did not object, and the debtors diligently consulted with professionals and counsel in creating the KEIPs.
viii. Wilmington Trust Company v. AMR Corporation (In re AMR Corporation), 490 B.R. 470 (S.D.N.Y. 2013)
Issue: Whether the bankruptcy court committed a harmless error in requiring a creditor moving for adequate protection to make an initial showing that its collateral was declining, or at a real risk of declining, in value.
Holding: The district court held that the bankruptcy court's error in requiring a creditor moving for adequate protection to make an initial showing that its collateral was declining, or at a real risk of declining, in value was harmless because the parties agreed that the value of the collateral was at least 120% of the value of the debt it secured.
©2014 William L. Norton III
