Philadelphia and Wilmington partner Andy Kassner and associate Joe Argentina published an article in The Legal Intelligencer titled, “It’s Not Over Until It’s Really Over: Eleventh Circuit Unwinds Bankruptcy Sale.”
The article discusses an exception to the typical progression of restructurings and bankruptcy administration: the case is filed, the business and assets are promptly sold, and then lawsuits are brought by allegedly aggrieved parties against insiders, professionals, and others asserting claims for damages resulting from the failure of the business and resulting bankruptcy. These state and federal court “wrongful death actions,” as the authors characterize them, often go on for years, but the bankruptcy filing and disposition of the debtor’s business and assets are rarely overturned.
An exception to this situation occurred in a recent decision of the United States Court of Appeals for the Eleventh Circuit. In Wortley v. Chrispus Venture Capital, LLC (In re Global Energies, LLC), No. 13-11666 (11th Cir. August 15, 2014), the court vacated an order confirming a bankruptcy sale entered in 2012 and remanded the matter back to the bankruptcy court for myriad matters, including punitive measures against the debtor’s principals, and the bankruptcy sale purchaser and its counsel. The court’s decision came in the wake of newly discovered emails that showed two of the debtor’s partners plan to use an involuntary bankruptcy and asset sale to oust their third partner.
Andy and Joe outline the facts of the case, discuss the various courts’ rulings, and explain why this case is a reminder of the need for an “open process with full disclosure of how the parties arrived on the scene.”
Read the entire article in The Legal Intelligencer.