On November 15, 2009, Champion Enterprises filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware.  According to Champion's Declaration in Support of First Day Bankruptcy Motions (the "Declaration"),  the company's bankruptcy is the result of an overall decline in the demand for manufactured housing and tightening of credit for potential home buyers.  Based in Troy, Michigan, Champion manufacturers homes at 22 home building facilities in 13 states.  At the time it filed for bankruptcy, Champion employed 1994 employees.

The Company's Financials

Champion lost $52 million in 2008, compared to a profit of $3.9 million in 2007.  Sales dropped by 23% during this same time period.  For the second quarter of 2009, Champion's revenues dropped over 55%, down to $129.5 million compared to $289 million in the second quarter of 2008.  According to its Declaration, the company's debt structure is as follows:

1. Term loans of $45 and $59 million;
2. Letters of credit for $40 and $43 million;  and,
3. Convertible unsecured notes of $180 million.

First Steps in Bankruptcy

Champion's Declaration summarizes the various first day motions it filed at the same time that it filed for bankruptcy.  One of the more significant "first day motions" is a motion to approve debtor in possession financing to fund Champion's restructuring.  According to the Declaration,  Champion considered seeking debtor in possession ("DIP") financing from third parties, however, Champion's prepetition lenders (with liens on substantially all of Champion's assets) rejected certain proposals for alternative financing.  Champion weighed the risks associated with litigating with its prepetition lenders over third party financing and instead decided to borrow from its prepetition lenders. Under the DIP financing motion, Champion seeks $32 million in a "new money loan." 

During the months leading up to bankruptcy, Champion attempted to find a suitable buyer for the company.  As of the petition date, Champion had not found a buyer, but hopes to do so under the sale provisions of the Bankruptcy Code. This bankruptcy proceeding is before the Honorable Kevin Gross.  Click here to review the Chamber Procedures for Judge Gross.

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Jason Cornell is a bankruptcy attorney at the law firm Fox Rothschild LLP in Wilmington, Delaware.  If you have questions regarding a Delaware bankruptcy proceeding, you may contact Jason at 302 427-5512, or jcornell@foxrothschild.com. 

The adversary actions filed in both Pope and Specialty Motors are before the Honorable Christopher S. Sontchi.  In prior preference actions, Judge Sontchi entered scheduling orders similar to the form scheduling order attached here.  A copy of Judge Sontchi's Chamber Procedures are attached here.

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Jason Cornell is a bankruptcy attorney at the law firm Fox Rothschild LLP in Wilmington, Delaware.  If you have questions regarding a Delaware bankruptcy proceeding,  you can reach Jason at 302 427 5512, or jcornell@foxrothschild.com.

Judge Kevin J. Carey, Chief Judge of the Delaware Bankruptcy Court, issued a decision recently in the S-Tran Holdings bankruptcy that addresses whether letters of credit constitute property of the bankruptcy estate.  The Court's decision in S-Tran Holdings is worth review as letters of credit are a common part of a debtor's pre and post-petition financing.  Recent decisions hold that certain components of letters of credit (such as the proceeds drawn from the letter of credit) are estate property, while other components (like the collateral pledged for the letter of credit) are not estate property.  S-Tran explains why.  (A copy of the decision in S-Tran is available here).

Background

The debtor in S-Tran sued its insurer in an effort to recover the proceeds from a letter of credit and a cash deposit, both held by the insurer.  In order for the insurer to provide coverage to S-Tran, S-Tran had to provide a $477,000 cash deposit and letters of credit totaling $3.5 million.  A week prior to S-Tran's bankruptcy filing, the debtor's insurer drew on portions of the letter of credit to pay third parties and placed the remaining proceeds from the letter of credit in a loss reserve account.  After filing for bankruptcy, S-Tran demanded the insurer return the proceeds from the letters of credit, however, the insurer refused.

Whether Letter's of Credit are Property of the Estate

The Court in S-Tran did not have to look far for case law regarding the treatment of letters of credit in the bankruptcy context.  In 2006, Judge Walsh issued an opinion in Oakwood Homes recognizing the "well established" rule that letters of credit, and the proceeds they generate, are not property of the estate.  OHC Liquidation Trust v. Discover Re (In re Oakwood Homes Corp.), 342 B.R. 59, 67 (Bankr.D.Del. 2006).  However, citing the Third Circuit, the court in Oakwood Homes also held that "the collateral pledged as a security interest for the letter of credit is [property of the estate]."  Id., citing Int'l Fin. Corp. v. Kaiser Group Int'l Inc. (In re Kaiser Group Int'l Inc.) 399 F.3d 558, 566 (3d Cir. 2005)(citations omitted).

Applying Oakwood and Kaiser, the Court in S-Tran found that the issuers of the letters of credit paid S-Tran's insurer the proceeds of the letters of credit, which the insurer then used to pay third parties and create a reserve account.  "Because the letter of credit proceeds were not paid with or secured by the Debtors' property, the fact that the proceeds were paid prior to the bankruptcy filing does not transform those entire proceeds into property of the estate."  S-Tran Holdings, et al., v. Protective Insurance Company, at *8, Adv. No. 07-51341, Oct. 5, 2009 (Bankr. D.Del.).

Conclusion

Like the debtor in Oakwood Homes, S-Tran sought to recover the proceeds from the letter of credit under section 542 of the Bankruptcy Code alleging claims for turnover of estate property.  However, like the court in Oakwood Homes, the Court in S-Tran held that section 542 is a remedy that is available only for debtors seeking to recover what is acknowledged to be estate property.  Section 542 is not appropriate, however, if a debtor seeks to recover claims that remain unliquidated or in dispute.  Although S-Tran might have a claim for excess letter of credit proceeds, the Debtor cannot recover such excess under section 542 until the amount of the claim has been liquidated.

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Jason Cornell is a bankruptcy attorney in Wilmington, Delaware with the law firm Fox Rothschild LLP.  If you have questions regarding a Delaware bankruptcy proceeding, you may contact Jason at 302 427-5512, or jcornell@foxrothschild.com.

Accuride Corporation, the Indiana-based manufacturer of heavy and medium-duty wheels, filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on October 8, 2009.  According to Accuride's Declaration in Support of First Day Motions, the company filed for bankruptcy in order to reduce its debt through confirmation of a pre-arranged restructuring plan.  Specifically, Accuride seeks approval of a plan of reorganization that (i) extends the maturity date on its loans to 2013;  (ii) cancels notes in exchange for 98% of the common stock of reorganized Accuride;  (iii) offers new senior secured notes worth $140 million; and, (iv) provides current stockholders with 2% of the stock issued for reorganized Accuride.

Accuride's Business

Accuride and Accuride Canada were formed in 1986 for the purpose of acquiring all of the assets of a division of Firestone.  Two years after formation, Phelps Dodge Corporation purchased Accuride.  One year after Phelps' purchase, Kohlberg Kravis Roberts & Co. acquired a controlling interest in Accuride.  As stated in Accuride's Bankruptcy Declaration, Accuride's stock originally traded on the New York Stock Exchange, however, it was subsequently delisted and now trades in the over-the-counter market.

The Company's Financials

In its Petition for Bankruptcy, Accuride lists its assets at $682 million, against liabilities of $847 million.  Accuride's sales reached $1.4 billion in 2006, however, by 2008 sales were down to $931 million. The company's senior credit facility includes a term loan with a balance of $303 million and a revolving credit facility with a principal balance of $100 million.  In addition to its credit facility, the company issued notes worth $275 million.  According to Accuride's Petition for Bankruptcy, its ten largest unsecured trade creditors are as follows:

1. Matalco Inc. ... $1.1 million
2. Joseph Tryerson ... $804,609
3. Ryerson ... $791,756
4. Gallatin Steel ... $557,663
5. American Colloid ... $323,409
6. PrimeTrade Inc. ... $321,506
7. Anixter Fasteners ... $248,044
8. Foseco Metallurgical $236,594
9. Hydro Aluminum $230,801
10. B&B Metals Processing ... $228,683

Events Leading to Bankruptcy

Accuride is one of several auto parts suppliers that filed for bankruptcy in recent months.  As with other parts manufacturers, Accuride attributes it bankruptcy filing to the global economic downturn.  In its Bankruptcy Declaration, Accuride cites an industry publication that reports a drop in demand for trucking vehicles by 23% in the first half of 2007.  Forecasts predict further declines for 2009.  Given the poor economic outlook for the last three years, Accuride's stock price fell from $16.91 in 2007 to $.36 per share at the time it filed for bankruptcy. 

This bankruptcy proceeding is before the Honorable Brendan L. Shannon.

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Jason Cornell is a bankruptcy attorney in Wilmington, Delaware with the law firm Fox Rothschild LLP.  If you have questions regarding this bankruptcy, or any other Delaware bankruptcy proceeding, you can contact Jason at 302 427-5512, or jcornell@foxrothschild.com.

In recent months, bankruptcy auctions went forward in two different bankruptcy proceedings that illustrate the extent to which auctions can vary both procedurally and substantively. One auction involved the sale of a single asset and lasted less than an hour, while the second auction involved the sale of the debtor's entire business and lasted over the course of several days.  This post is intended to provide a brief "compare and contrast" of these two auctions in an effort to provide insight into a process that is a common component of corporate bankruptcies.

Two Different Auctions

For the sake of clarity, the auctions referenced in this post will be named "Short Auction" and "Long Auction," referring to time required to complete each auction.  Short Auction was part of a chapter 11 bankruptcy of a multi-national corporation with assets valued in the hundreds of millions of dollars.  Short Auction involved the sale of a large piece of commercial real estate, whereas Long Auction involved the sale of the debtor's entire business.  The debtor selling assets in the Long Auction also filed under Chapter 11, however, its total assets were a fraction of the size of the debtor involved in the Short Auction.

Short Auction began at 8:00 in the morning at the Delaware offices of the debtor's attorney.  Several parties were present at the auction, including representatives for the two bidders for the debtor's asset and counsel for the debtor.  A court reporter was also present to make a record of the auction process.  Long Auction, in contrast, started at 8:00 p.m. and included counsel for the creditors' committee, debtors and counsel for the bidders.  In Short Auction, a successful bidder emerged within 30 minutes of the commencement of the auction.  Long Auction, on the other hand, went late in the night and was adjourned for several days while bidders explored additional financing.

Take Aways from Both Auctions

Why was Short Auction short and Long Auction long?  The answer is rather straight forward - Short Auction involved the sale of a small component of the debtor's overall business, whereas Long Auction sought to sell all of debtor's business.  Further,  the buyers in Short Auction came to the table with cash compared to the Long Auction that included credit bids and other contingencies that complicated the process. 

In Short Auction, there was only one "break out session" where a bidder sought higher authority from a decision maker who was available by phone.  Long Auction, on the other hand, had several break out sessions, some lasting close to an hour.  The point of all this is that auctions in bankruptcy vary as to duration and result, however, at the end of the day parties will want to make sure the auction was fair and the result of arms-length negotiations (as was the case in both Short and Long Auctions).   And although the debtor's decision to sell its assets outside the ordinary course of business fall under the broad discretion of the business judgment rule,  the Bankruptcy Court will nevertheless scrutinize the successful bid to insure that it is in the best interest of the bankruptcy estate and the result of a good faith negotiations by the parties.

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Jason Cornell is a bankruptcy attorney in the Wilmington, Delaware office of Fox Rothschild LLP.  If you have questions regarding a chapter 7 or 11 bankruptcy proceeding, you are welcome to contact Jason at 302 427-5512, or Jcornell@foxrothschild.com.

As stated in its Declaration, Samsonite leases 173 retail stores in 38 states.  Due to a sudden drop in consumer demand for travel products, Samsonite experienced a significant reduction in its cash flow.  As a result, the company engaged in a restructuring process that culminated in the filing of its bankruptcy petition in Delaware.  Through bankruptcy, Samsonite intends to reject up to 84 leases for those stores the company deems unprofitable. 

Landlords dealing with commercial tenants in bankruptcy face a host of issues, including administrative rent, rejection damages and adequate assurance.  A previous post on this blog titled "Ten Things Every Commercial Landlord Should Know About a Tenant in Bankruptcy" provides a good introduction to the issues that confront a landlord when a commercial tenant files for bankruptcy.  Judge Peter J. Walsh, a former Chief Judge of the Delaware Bankruptcy Court, recently issued an opinion in the Sportsman's Warehouse bankruptcy that provides a very helpful understanding of how bankruptcy courts approach claims for administrative rent and taxes that arise under a lease.  Landlords in Samsonite may find Judge Walsh's decision particularly relevant as Judge Walsh is also the judge presiding over the Samsonite bankruptcy.  

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Jason Cornell is a bankruptcy attorney with Fox Rothschild LLP in Wilmington, Delaware.  If you have questions regarding this or any other Delaware bankruptcy proceeding, you may contact Jason at 302 427-5512, or jcornell@foxrothschild.com.

Barzel Industries, the Massachusetts-based metal manufacturer, filed for bankruptcy on September 14, 2009, in the United States Bankruptcy Court for the District of Delaware.  One of the initial documents Barzel filed with the Bankruptcy Court is a Declaration in Support of First Day Pleadings (the "Declaration").  According to the Declaration, as of the petition date Barzel has 600 employees working at 15 different manufacturing and distribution facilities in the U.S. and Canada.

Events Leading to Bankruptcy

According to the Declaration, Barzel's bankruptcy was the result of operating losses that began in 2008 and continued in to 2009.  Barzel ties its losses directly to the "current global economic recession and credit crisis, and the resulting dramatic downturn in the automotive, transportation, manufacturing and construction industries in the United States and Canada."  These industries account for much of Barzel's business.  Barzel's problems worsened following a drop in the price of steel.  With prices and demand both down, Barzel sought to reduce expenses and improve its operations by closing 6 facilities and reducing its workforce by 350 employees.

Barzel's cost-cutting measures were not enough and in May of this year, the company missed an interest payment due on its Senior Secured Notes, two-thirds of which are held by JPMorgan Chase.  With few options remaining, Barzel began looking for potential purchasers of the company.  As a result of its marketing efforts, 72 parties executed confidentiality agreements and 12 made offers to pursue a purchase transaction.

On September 14, 2009, Barzel entered into an asset purchase agreement with Chriscott USA Inc. and 4513614 Canada.  Under the APA, Barzel will sell substantially all of its assets for $65 million unless a better offer comes about through the bankruptcy auction process.  Barzel's lenders have agreed to finance its bankruptcy proceeding through December 11, 2009, while Barzel completes the auction process. 

According to Barzel's Bankruptcy Petition, its assets total $365 million against debts totaling $384 million.  This bankruptcy is before the Honorable Christopher S. Sontchi.

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Jason Cornell is a bankruptcy attorney with Fox Rothschild LLP in Wilmington, Delaware.  If you have questions regarding this or any other bankruptcy proceeding, you may contact Jason at 302 427-5512, or jcornell@foxrothschild.com. 

In June of last year, retailer Whitehall Jewelers filed for Bankruptcy in the United States Bankruptcy Court for the District of Delaware.  Last month, 14 months after filing for bankruptcy, Whitehall filed over 90 adversary actions in Delaware seeking to recovery payments the company made to various creditors during the 90 days prior to its filing for bankruptcy. 

Debtors in bankruptcy (or their assignee) routinely seek to recover what they allege are "avoidable transfers" from the creditors who received payments as the debtor slides into bankruptcy.  While "ordinary course of business" and "new value" are core defenses frequently relied upon by defendants in a preference action, there are less common defenses that should not be overlooked. 

This post will look briefly at the "mere conduit" defense.  Although the mere conduit defense is not always available to certain creditors, it is helpful to have an understanding of how the mere conduit defense has been applied by bankruptcy courts in both the District of Delaware and other jurisdictions. 

 The Elements of a Preference Action

Congress provides a debtor in bankruptcy with a cause of action for preference payments pursuant to section 547(b) of the United States Bankruptcy Code.  Under section 547(b), a debtor in bankruptcy may "avoid any transfer of an interest of the debtor in property (1) to or for the benefit of a creditor; (2) for or on account of an antecedent debt owed by the debtor for such transfer was made; (3) made while the debtor was insolvent; (4) made (A) on or within 90 days before the date of the filing of the petition ..." 

Mere Conduit Defense

Congress also provided parties who received alleged "preference payments" with several defenses.  The "mere conduit" defense is set forth under section 550(a)(1) of the Bankruptcy Code and provides an exception to a debtor's ability to recover preferential transfers:

Except as otherwise provided in this section, to the extent a transfer is avoided under section ... 547 ... the [debtor] may recover, for the benefit of the estate, the property transferred, or, if the court so orders, the value of such property, from -

(1) the initial transferee of such transfer or the entity for whose benefit such transfer was made ... 

Application of the Mere Conduit Defense

Courts deciding whether to apply the mere conduit defense look to whether the defendant who allegedly received the preferential transfers had "dominion and control" over the payments.  U.S. Interactive v. Sampson Travel Agency (In re U.S. Interactive), 321 B.R. 388, 395 (Bankr. D. Del. 2005).  For a defendant to establish the mere conduit defense, it must show that the payments received from the debtor "merely slipped through his hands to another party."  Id., citing Bailey v. Big Sky Motors, Ltd. (in re Ogden), 314 F.3d 1190, 1196 (10th Cir. 2002);  see also, Christy v. Alexander & Alexander of New York Inc., (In re Finley, et al.), 130 F.3d 52, 58 (2d Cir. 1997).  If the defendant had the right to put the money to its use as it saw appropriate, the mere conduit defense does not apply.  Official Comm. of Unsecured Creditors v. Guardian Ins. 401 (In re Parcel Consultants, Inc.), 287 B.R. 41, 46 (Bankr. D. N.J. 2002).

In U.S. Interactive, the court found that the defendant, a travel agent, did not satisfy the mere conduit defense because the defendant was able to deposit the funds into its own checking account and do with the money as it saw fit.  Instead, what is required to satisfy the mere conduit defense is evidence that the initial recipient of the payments lacked the power to decide who to pay with the funds.  The decision in U.S. Interactive suggests that if the initial recipient of the money received from the debtor is required to deposit the funds in a separate account (versus its general operating account), and those funds are subsequently forwarded to a third party, the defense may apply. 

Conclusion

Clearly, the mere conduit defense has limited application to parties who are defending a preference action.  However, for those defendants whose circumstances show they lacked "dominion and control" over the payments, and instead forwarded the payments to a third party,  the defense can be a valuable tool in reducing or eliminating exposure in a preference action.

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Jason Cornell is an attorney who practices in Fox Rothschild's Wilmington, Delaware office.  If you have questions regarding this, or any other bankruptcy matter, you may contact Jason directly at 302 427-5512, or jcornell@foxrothschild.com.  Please be advised that Fox Rothschild LLP does not represent Whitehall Jewelers in this bankruptcy proceeding.  Click here if you would like to read other posts on this blog regarding issues that arise in preference litigation.

Less than two years after its formation, credit card processor, Cynergy Data, filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware.  According to Cynergy's Declaration in Support of Chapter 11 Petitions and First Day Motions,  the company processes over $10 billion in credit payments over a twelve month period.  Cynergy's card volume is the result of transactions with over 80,000 merchants.

Cynergy filed for bankruptcy in order to receive bankruptcy court approval of the sale of substantially all of its assets to the ComVest Group under section 363 of the United States Bankruptcy Code.  Cynergy and ComVest entered into an asset purchase agreement following an auction process wherein Cynergy contacted over 48 different parties that might have an interest in purchasing its assets.  In response to its marketing efforts, 24 parties executed confidentiality agreements allowing them to review Cynergy's books and records in order to submit a bid.  Three final offers were submitted and ComVest and Cynergy executed an asset purchase agreement on August 26, 2009.

Sale Process

At the same time that it filed for bankruptcy, Cynergy also filed a motion approving bid procedures and the sale of substantially all of its assets.  Included in the sale motion are procedures to designate those contracts that will be assumed and assigned under the asset purchase agreement.  Cynergy proposes sending "Cure Notices" which will identify the contracts to be assigned, as well as the cure amount for any defaults, as provided for under section 365 of the Bankruptcy Code.  The sale motion also spells out how parties can file objections to the Cure Notice.

Creditors whose contracts are assumed and assigned to the purchaser of Cynergy's assets may stand in a substantially better position than those creditors whose contracts or leases are not assumed and assigned.  Under section 365 of the Bankruptcy Code, a debtor in bankruptcy must "cure" defaults under a contract , or provide adequate assurance that the debtor will promptly cure, before the contract can be assumed and assigned to a third party.

Cynergy's Financials

According to Cynergy's Petition for Bankruptcy, the company has assets of $109 million against debts of $186 million.  As stated in the Declaration, Cynergy entered into a senior credit facility for $39.8 million with Comerica Bank as agent, and a junior credit facility for $80 million with Dymas Funding Company as agent (both credit agreements are prepetition).  The company lists its 10 largest unsecured creditors as follows:

1. Process America ... $2.8 million
2. Paymentech ... $2.6 million
3. TSYS ... $1.4 million
4. wwwmygrantsitenet  ... $1.4 million
5. Second Source ... $1.1 million
6. DJM*Lifstylefit.com ... $900,764
7. wwwfedgrantusa.com ... $812,629
8. Merchant Processing Services ... $756,782
9. Pivotal Payments ... $509,068
10. Fast Transact ... $503,110

This bankruptcy proceeding is before the Honorable Kevin Gross. 

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Jason Cornell is a bankruptcy attorney in the Wilmington, Delaware office of Fox Rothschild LLP.  If you have questions regarding this or any other Delaware bankruptcy proceding, you may contact Jason at 302 427-5512, or jcornell@foxrothschild.com.  Fox Rothschild LLP does not represent Cynergy Data LLC in this bankruptcy proceeding.

Freedom Communications Holdings, the Orange County, California newspaper publisher, filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on September 1, 2009.  (You can review a copy of Freedom's Petition for Bankruptcy here.)  According to the Declaration of Freedom's Chief Financial Officer, the company's decision to file for bankruptcy was based on several factors, most notably the continual decline of advertising revenues in the newspaper industry and increased competition in web-based advertising. 

In September of 2008, Freedom defaulted under is prepetition credit agreement with its lenders.  Although the lenders agreed to several loan amendments, Freedom eventually realized that an out-of-court workout would not resolve its financial problems.  Besides declining ad revenue, Freedom's finances were further weakened by the settlement of a class action brought by various newspaper carriers.  Pursuant to the terms of the class action settlement, Freedom was obligated to pay over $28 million into an escrow account to fund the settlement.  The terms of the settlement agreement provided that the class action settlement would not become final until September 14, 2009.  By filing for bankruptcy before September 14th, Freedom contends that the "settlement funds have become property of the chapter 11 estate and, therefore, are subject to immediate return to the [company]."  (More information regarding the reasons behind Freedom's decision to file for bankruptcy are available in Freedom's Declaration in Support of Chapter 11 Petitions and First Day Pleadings)

Debtor's Operations

Freedom Communications' origins go back to 1935 when R.C. Hoiles purchased The Orange County Register.  From its beginnings through 2000, the company purchased newspapers and other publications in the states of Arizona, California, Colorado, Florida, Illinois, Indiana, Missouri, New Mexico, North Carolina, Ohio and Texas.  According to Freedom's Declaration, as of its petition date, the company owns 90 daily or weekly publications and 30 daily newspapers.  In addition to print publications, Freedom also owns eight television stations, most of which are either ABC or CBS affiliates.  Including contractors, Freedom employs over 8,200 individuals.

Debtor's Financials

Freedom lists its assets with a book value of $757 million, against liabilities totaling over $1 billion.  Included in Freedom's debt is its credit agreement of approximately $770 million.  The remaining $306 million in liabilities includes trade claims, contract claims, lease claims, non qualified retirement plan claims and litigation claims.  According to Freedom's Petition for Bankruptcy, the company's ten largest unsecured creditors include:

1. JP Morgan (unsecured loan) ... $770 million
2. Class Action Plaintiffs ... $28.9 million
3. Kingworld Productions, Inc. ... $1.5 million
4. North Pacific Paper ... $1.2 million
5. Bowater America, Inc. ... $753,326
6. Inland Empire Paper ... $590,502
7. SP Newsprint  Co. ... $548,151
8. Vertis Inc. ... $381,416
9. Impression Inks West ... $374,591
10. Abitibi Consolidated Sales ... $356,630

Conclusion

This bankruptcy proceeding is before the Honorable Brendan L. Shannon.  There has been substantial activity in this case within the first 24 hours of the petition date.  Included among the company's "first day" bankruptcy motions is a motion to pay certain critical vendors, a motion seeking administrative claim status of postpetition goods and a motion to establish procedures for the rejection of executory contracts and leases.  (To read a prior post on issues relevant to lease rejection, click here).

Many debtors file for bankruptcy in an effort to sell-off assets under the protection of section 363 of the United States Bankruptcy Code.  Freedom states in its Declaration that it filed for bankruptcy in order to restructure its debt under a plan of reorganization.  To that end, the company intends to file a disclosure statement and plan of reorganization within 45 days from the date it filed for bankruptcy.

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Jason Cornell is a bankruptcy attorney who practices in Wilmington, Delaware with Fox Rothschild LLP.  If you have questions regarding this or any other Delaware bankruptcy proceeding, you may contact Jason at 302 427-5512, or jcornell@foxrothschild.com.  Fox Rothschild LLP does not represent Freedom Communications Holdings in this bankruptcy proceeding.