Page 11 - Delaware Lawyer - Winter 2022

Delaware remains on the forefront as one of the nation’s leading bankruptcy courts with respect to procedural and substantive matters.
NOTES
1. Certainly, prepacks and other similar pre-negotiated Chapter 11 plans continue to be used and approved in Delaware. For example, in In re HighPoint Resources, Case No. 21-10565 (CSS), Judge Sont- chi confirmed, within four days of the bankruptcy filings, the debtors’ (develop- ers of oil and natural gas assets) prepack plan implementing a third-party merger. Prior to the bankruptcy filing, HighPoint completed solicitation (voting classes voted in favor of the plan) and provided
at least 28 days’ notice of the proposed confirmation hearing and plan objection deadline (in compliance with Bankruptcy Rule 2002(b)). Similarly, in In re Riverbed Technology, Case No. 21-11503 (CTG), Judge Goldblatt confirmed a prepack plan within 18 days of the filing, which became effective a total of 21 days after the volun- tary petition. See also, e.g, In re Chaparral Energy, Inc., Case No. 20-11947 (MFW) (Bankr. D. Del. 2020) (prepackaged plan went into effect within 59 days of the petition date); In re Broadvision, Inc., Case No. 20-10701 (CSS) (Bankr. D. Del. 2020) (49 days).
2. Bankruptcy by the Numbers: Delaware Chapter 11s, ABI Journal (March 2002).
3. Judge Balick passed away in September 2020. Upon learning of Judge Balick’s death, then-Chief Judge Christopher Sont- chi issued a statement, which said: “Her 24 years of judicial service saw monumen- tal changes in the Delaware bankruptcy practice and led the way to the six [soon to be eight]-member court of today. She was an outstanding jurist with an occasionally feisty judicial demeanor. She also had an excellent sense of humor. She was cordial to all and particularly kind to young law- yers, quickly learning their names. She leaves behind a formidable legacy. We all owe a great deal of gratitude to her for her 24 years of service to the Court and the pioneering role she played in the Delaware bar and in making our court what it is today.” (available at https://www.legacy. com/us/obituaries/delawareonline/name/ helen-balick-obituary?id=7334916).
4. Bankruptcy judges from other jurisdic- tions had been invited to handle some Del- aware cases, for six-month stints, to reduce the caseloads of Judges Walrath and Walsh.
5. A criticism of some jurisdictions outside of Delaware is that the judges have varying chambers and other judicial procedures. The Delaware bankruptcy judges generally use a uniform set of chambers procedures (with some minor exceptions).
6. This high number of cases is due in large part to the impact of the COVID-19 pan- demic; for comparison, in 2019, the Dela- ware Bankruptcy Court had 611 Chapter 11 filings. The filings slowed down in the first half of 2021, with approximately 381 commercial Chapter 11 cases filed in Dela- ware, but it still ranks second overall in the nation (sources: Delaware Business Times
& U.S. District Court of Delaware 2021 Annual Report).
chambers procedures and practices;5 and (4) requiring more transparency and consistency in debtor-in-posses- sion (DIP) financing and cash collat- eral pleadings and documents.
With respect to the last matter, Judge Walsh in 1998 had made a carefully prepared open-letter request to the Delaware Bar to, among other things, consider and highlight cer- tain material provisions in any DIP financing request so that both the judge and the parties reviewing the emergency financing requests could adequately analyze the pleadings and other documents. Judge Walsh’s rec- ommendation was largely adopted and incorporated into the local rules under Del. Bankr. L. R. 4001-2. While procedural in nature, the sub- stantive impact of this development is clear. Highlighting such material provisions for the court and the oth- er parties provides necessary clarity that balances the needs of a debtor with the rights of various parties that will not appear until later in the case, allowing the court to deny or make temporary the relief requested until a creditors’ committee can be appoint- ed to address the relevant issues.
Ongoing Importance of the Bankruptcy Court System
While over time several other ju- risdictions have also become par- ticularly popular bankruptcy venues, Delaware remains on the forefront as one of the nation’s leading bankrupt- cy courts with respect to procedural and substantive matters (including a myriad of developing and complex
legal matters such as Subchapter V cases, third-party releases, plan con- firmation issues, structured dismiss- als, prepacks, etc.).
Notably large and complex, recent Chapter 11 cases include Hertz Global, Case No. 20-11218 (Hertz filed bankruptcy in May 2020 with more than $20 billion in debt, after its business stalled due to govern- ment-imposed COVID-19 restric- tions and a huge drop in demand for its vehicles) and Brooks Brothers, Case No. 20-11785 (the oldest ap- parel company in the United States, with more than 400 retail and facto- ry outlet stores before its bankruptcy filing). Other notable recent Chap- ter 11 filings in Delaware include Quorum Health (with more than $1.6 billion in debts), RTI Holding (Ruby Tuesday restaurants), Pyxus International (a global agricultural company that through its confirmed plan reduced its debts by more than $400 million), 24 Hour Fitness, GNC Holdings and Lucky Brands. The Delaware Bankruptcy Court re- mains one of the busiest bankruptcy courts in the country. In 2020, the Delaware Bankruptcy Court had 1,666 commercial Chapter 11 fil- ings, surpassing all other bankruptcy courts’ Chapter 11 totals.6
From the relatively modest begin- nings of this court system, the past and current Delaware bankruptcy judges carry on the tradition of ex- pert, effective and efficient adminis- tration of large and complex Chapter 11 cases, started in a one-judge bank- ruptcy court “backwater.”
WINTER 2022 DELAWARE LAWYER 9