Summaries of Select Published Decisions within the 6th Circuit
order may be res judicata to claims that could have been raised in
connection with sale but were not explicitly reserved.
Winget v. JP Morgan Chase Bank, N.A.,
2007 U.S. Dist. LEXIS 15968 (E.D. Mich. 2007)
Winget (Winge”), who owned substantially all of the Venture entities,
as well as other assets, guaranteed a loan from JPMorgan Chase
(Chase) to Venture under the Eighth Amendment to the credit agreement
between Venture and Chase. The guaranty and pledge agreement
signed by Winget provided that Chase would not pursue the guaranty and
pledge agreement collateral until all reasonable efforts to collect
from Venture had been exhausted. In 2005, after Venture filed
for bankruptcy and was ultimately sold at auction, Chase sued Winget to
enforce the guaranty and collect its deficiency claim of approximately
$375 million. Winget counterclaimed, asserting that Chase had
failed to preserve its collateral, had breached the pledge agreement,
and was barred by unclean hands and lack of good faith.
Winget was ordered to comply with Chase’s audit request (count one of
the Chase complaint) but Winget’s counterclaims and Chase’s right to a
declaratory judgment would be determined in a subsequent
case. In 2006, Winget filed a complaint, alleging that Chase,
as well as others, failed to make all reasonable efforts to collect
their collateral from the Venture entities, wrongfully exposing Winget
to liability under the guaranty documents. The United States
District Court for the Eastern District of Michigan (Cohn, J.), found
that Winget’s 2006 complaint against Chase was premature and sought an
advisory opinion, because Chase had not taken any actions to enforce
the pledge agreement or the guaranty. The court also found
that because Winget’s claims against Chase could and should have been
litigated as a part of the entry of the order authorizing the sale of
substantially all of the assets of Venture. Because they were
not, and because Winget withdrew his objections to the sale order and
did not challenge or appeal the sale order, Winget is barred by res
judicata from asserting claims against Chase related to the sale of the
purchasers of financially troubled companies should consider
creative means of structuring purchaser to avoid fraudulent
Valley X-Ray Co. v.
VPA, P.C., 2007 U.S. Dist. LEXIS 172 (E.D. Mich. 2007)
In 2000, Valley X-Ray (VXR) entered into an agreement to
sell substantially all of its assets to Diversified Medical Group
(Diversified). Diversified terminated the sale agreement
without purchasing VXR’s assets, and VXR subsequently entered into a
letter agreement with VPA, P.C. (VPA), who agreed to pay VXR $10,000
for its assets, as well as to pay VXR’s liabilities. Under
the terms of the letter agreement, VPA had 90 days to refuse to
consummate the sale without incurring any liability. Sometime
during the 90-day period, VPA became concerned about VXR’s substantial
liabilities and decided that it did not want to purchase VXR’s
liabilities. VPA was approached by Diversified, which was
still interested in the VXR assets, but concerned about the “bad blood”
between it and VXR as a result of the earlier, failed
transaction. Therefore, in order to permit Diversified to buy
the VXR assets without VXR knowing Diversified was the purchaser, VPA
and Diversified formed an acquisition entity, Valley Medical Services
(VMS). VPA and Diversified were the sole members of VMS,
and the VMS operating agreement provided that after the closing of the
sale of the VXR assets, Diversified would purchase VPA’s share of
VMS. Diversified, through VMS, funded VMS’s purchase of the
VXR assets. VMS received a bill of sale for the VXR assets,
for which, in total, Diversified paid $725,305.36. After VXR
was filed into an involuntary bankruptcy, the VXR trustee
(Trustee) sued VPA for return of a fraudulent conveyance.
Judge Tucker of the Eastern District Bankruptcy Court held that the
Trustee could not recover from VPA because VPA was not (1) the initial
transferee of the transfer, (2) the entity for whose benefit the
transfer was made or (3) an immediate or mediate transferee of the
transfer. Judge Feikens of the District Court affirmed,
finding that VMS was not an alter ego of VPA, VMS was not acting as
VPA’s agent at the time of purchase, and VPA was not the entity for
whose benefit the transfer was made.
Notes from the
Debtor/Creditor Rights Committee
RIGHTS COMMITTEE, MEETING NOTES OF 1/10/07
The Debtor/Creditor Rights Committee met
over Chinese food on January 10, 2007, at the Southfield offices
of Jaffe Raitt. Twenty-two members heard Jessica Allmand and
Majoros speak on litigation to avoid refinancing mortgages,
including the December 10, 2006, hearings before all of the
bankruptcy judges. David Ruskin spoke about the Chapter 13
trustees' project to install wireless internet access for the
Chapter 13 trustees at the Eastern District of Michigan bankruptcy
court and their willingness to allow the Committee to work
with them to expand the project to include the entire bankruptcy
bar. David Lerner and Willard Hawley agreed to represent the
Committee and work with the Chapter 13 trustees on the project
NEXT DEBTOR/CREDITOR RIGHTS
When: May 9, 2007, 6 p.m.
Where: Honigman's Oakland County
offices, 38500 Woodward, Suite 100, Bloomfield Hills
Articles for Michigan Business Law Journal
Internet Access of the Eastern District
of Michigan Bankruptcy Court
Correcting the Michigan Exemption
Local Rules for the Michigan Exemption Legislation
Amending Michigan’s Recording Statutes
RSVP to Judy
Calton or Judy
Miller if you are attending
WIRELESS INTERNET ACCESS FOR THE
BANKRUPTCY COURT, MEETING NOTES
Will Hawley, Co-chairperson on the new sub-committee on wifeless
internet access for the bankruptcy court, reported his notes of the
initial meeting of that sub-committee as follows:
The initial meeting of the chairpersons for the
debtor/creditor rights section sub-committee on wireless internet
access for the bankruptcy court occurred recently. Committee
chairpersons Will Hawley, David Lerner and David Ruskin discussed
many issues related to the project, including funding, administration,
logistical issues and access speed, as well as coordination
with various parties necessary for a successful implementation.
While there are many issues taking the project, the sub-committee
remains committed to the project and believes that successful
implementation would greatly benefit practitioners in our
district. Look for more information on the project in
upcoming issues, and if you have questions or suggestions,
contact Will Hawley at email@example.com
HOW TO GET YOUR COPY OF NEWSMAG
What you're reading right now is the April 2007 issue of
NewsMag, a publication of the Debtor/Creditor Rights
Committee of the Business Law Section of the State Bar of Michigan.
To receive NewsMag you must be a member of the Business Law
Section. NewsMag goes out to all 450 members. To sign up for membership just
call the State Bar at (800) 968-1442.
on the Listserv for NewsMag
Any questions, just contact Judy Calton or Judy Miller,
Co-Chairs of the Committee.
HOW TO BECOME A BIG FISH
You can become a big fish in
a little pond by becoming a contributing editor to NewsMag.
It's not hard. All you have to do is write a 3 or 4 paragraph
article on some topic of current interest which the general
practitioner in the everyday battlefield of bankruptcy should
know about. Remember our objective: a quick read for the
lawyer on the run. Just crank one out and you will get a credit
on the front page of NewsMag as a contributing editor.
Your editorial comments are most welcome.
What we are looking for is cases, published and unpublished
rulings of the Eastern and Western District, judges' preferences,
procedures newly adopted by the U S Trustee's office, interesting
cases just filed, etc.
HOW TO GET YOUR TWO
CENTS IN - WRITE A LETTER TO THE EDITOR
Is there something you would like to say to the Bench or the
Bar but never had the chance? Is there a comment you’d like to make
about our bankruptcy system in a very public way? Is there an accolade
or admonishment that needs to be aired?
here’s your chance!
This is to let you know we
have added a Letters to the Editor column to NewsMag. By now
you should have received the February 2007 issue. We reach
over 450 e-mail addresses including the judges of the Eastern
and Western District Bankruptcy Courts.
If you would like to put in your
two cents about bankruptcy - good, bad, constructive, critical, or
whatever - please send it to Letters to Editor c/o Marty Fried.
BAR SECTION SCHEDULES TWO DAY BENCH BAR CONFERENCE
When: May 2 - 4
Where: St. John's
Conference Center in Plymouth
is now open for the 2007 Michigan Appellate Bench Bar Conference, May
2-4, 2007, at St. John’s Conference Center in Plymouth. The
conference features panel discussions with judges of the Michigan Court
of Appeals and Supreme Court on appellate decision-making and court
practices; a keynote address on oral advocacy; break-out sessions on
specific practice areas; and opportunities for informal interaction
with the judges and court staff. Registration, including
reception, dinner, materials and two lunches, is $295. Some
scholarships are available. The conference brochure and
registration form are available at www.benchbar.org
NUTS & BOLTS SEMINAR
When: Monday, May 7, 2007, 9 a.m. to
Where: Sterling Heights Inn, Sterling Heights
The Consumer Bankruptcy Association would like to announce the upcoming
NUTS & BOLTS SEMINAR. Please mark the date on your calendar and
plan on attending as you won’t want to miss out on the fun and
activities the CBA has planned for you!
Questions? Contact Karen
IWIRC FEATURES LYNN TILTON
When: Wednesday, May 16, 5:30 p.m.
Where: Bodman offices at Ford Field
Tilton is the founder and CEO of Patriarch Partners, LLC.
Patriarch Partners is an investment fund based in New York and
Charlotte, North Carolina. Patriarch provides portfolio management
services to 8 leveraged funds and a private equity fund, which funds
own and manage a diverse portfolio of international companies and
credit facilities with an aggregate asset value of approximately $4.5
billion including equity ownership positions (majority and minority) in
more than 60 companies.
BUSINESS LAW INSTITUTE ANNUAL
Saturday, June 1-2, 2007
Where: Mountain Grand Lodge
& Spa, Boyne Falls
The annual seminar is sponsored by the Business Law Council of the
State Bar of Michigan. Presentations include Global Business: Meeting
International Compliance Requirements and Expectations, How to Build
Your Practice, Case Law and Legislative Updates, Business Outlook for
Michigan, Understanding Insurance Coverage and both a Mergers &
Acquisitions breakout and an “in a nutshell” break-out track.
ABI CENTRAL STATES
June 14 - 17, 2007
Where: Grand Traverse Resort and Spa
Now in it’s fourteenth year, the annual Central States
Bankruptcy Workshop brings together America’s preeminent insolvency
professionals for four days of intense learning and fun. Bring the
whole family and enjoy the best Michigan has to offer.
MICHIGAN BUSINESS LAW JOURNAL SEEKS
for longer articles. The March 2008 edition
of the Michigan Business Law Journal will feature
articles on bankruptcy law and other debtor-creditor topics. The
Debtor/Creditor Rights Committee is responsible for compiling
and submitting articles for this edition. Thomas R. Morris
of Silverman & Morris, P.L.L.C. is serving as the edition
editor. If you have a topic of interest on which
you would like to write an article (and it is too long to be
accommodated by the NewsMag), or if you are willing
to review articles written by others, please contact Tom by
e-mail at Morris@SilvermanMorris.com,
or attend the committee meeting on Wednesday, May 9 (see announcement
ADMINISTRATIVE OFFICE ANNOUNCES
CHANGES IN CERTAIN DOLLAR AMOUNTS
The Administrative Office of the United
States Courts announced the automatic adjustment of certain dollar
amounts to go into effect for cases filed on or after April 1, 2007.
View the List
LETTERS TO THE EDITOR
"Feb Newsletter- Nice Job!"
"This is great! Debtor/CreditorNewsMag"
Byron Otto Kuxhaus
"your magazine is wonderful"
IT'S YOUR TURN!
there something you would like to say to the Bench or the Bar but never
had the chance? Is there a comment you’d like to make about our
bankruptcy system in a very public way? Is there an accolade or
admonishment that needs to be aired?
This is to let you know we have
added a Letters to the Editor column to NewsMag. By
now you should have received the February 2007 issue. We reach
over 450 e-mail addresses including the judges of the Eastern
and Western District Bankruptcy Courts.
If you would like to put in your two cents
about bankruptcy - good, bad, constructive, critical, or whatever -
please send it to Letters to Editor c/o firstname.lastname@example.org.
SEYMOUR SEZ—Wise Words of a Wry and Whimsical Wit
Our own homegrown philosopher-lawyer, Seymour Markowitz, has been busy in the courtrooms keeping both bench and bar on their toes. Over the years, Seymour has made many observations worth sharing with the lawyer in the battlefield of everyday bankruptcy practice as well as in the battlefield of everyday life. Each issue of NewsMag will present a few words from Seymour to help us get through it all. Read on -
Idle hands are the Devil's tools;
an idle mind is the Devil's workshop;
an idle bankruptcy attorney is the Devil's associate.