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June 2014 Archives

Trustee Exercises Clawback Authority in Kodak Chapter 11 Aftermath

The demise of few companies has so accurately depicted the changing environment caused by the rise of computers, the internet and smartphones as the bankruptcy of the Eastman-Kodak Company (“Kodak”). As a worldwide leader in photography for several decades and employer of hundreds of thousands of employees, Kodak was an icon all over the globe. The notion that the company would cease to exist just ten years prior to its bankruptcy would have appeared quite fanciful at the time.

Testifying in your Personal Injury Accident Case

When you get injured in an automobile accident which necessitates your bringing a personal injury claim against the at-fault driver, it is likely that you will be placed in some positions where you may be asked to give a verbal statement either to a claims representative of that driver’s insurance company, to testimony to an opposing counsel in a deposition or at trial before a judge and/or jury. Each of these instances should be treated differently. Below we review each situation:

Professional Held Liable for Spoliation in Corporate Dissolution Dispute

Certain professions such as physicians, can under New Mexico law and the law of many other states form professional corporations to operate their the business which governs their professional affairs. In the case of Aduz Healthcare Services, PC, it was determined, by a 2-1 vote of its partners, that the professional corporation would dissolve and that certain terms concerning the accounting of earnings after the dissolution would apply so as to ensure that the professional corporation receives funds to which it was still entitled. All monies earned from Dr. Herbert Ojiaku’s medical practice were to be deposited first to the corporation, and then timely forwarded to the PC by Rebecca Baeza, a nonparty selected to maintain all relevant accounts and report on the funds received by Dr. Ojiaku during the time in question.

Bankruptcy Mediation Spurs Board Resignations

In a recent blog post, it was reported that LightSquared, Inc., a company undergoing reorganization under Chapter 11, was ordered by the bankruptcy judge presiding in the case to return to mediation. Now it appears that the head of the company, Philip Falcone and four other board members have voluntarily resigned from the board of directors of the company. The development raises the question whether the negotiations that have taken place during the court-ordered mediation forced these board members to resign.

City of Detroit Reaches Agreement with Certain Group of Insurers for Municipal Bondholders

After resolving many other aspects of Detroit’s chapter 9 bankruptcy case, mediators addressing the disposition of claims from certain debt holders set the path for a trial in which the bankruptcy judge will assess the fairness of the negotiated plan. Last week both assemblies of Michigan’s Legislature approved necessary funding for that plan. Now mediators assigned to negotiate between the City and insurers for bond holders who issued limited tax, general obligation bonds known as LTGOs have announced an unspecified agreement has been reached concerning the treatment of claims by these creditors.

Civil Rights Group Expands Suit against State Concerning Education

A couple of months ago it was reported on this blog that two different groups had sued New Mexico’s Public Education Department for violations of the State Constitution of New Mexico. Article XII, Section 1 of the New Mexico State Constitution reads, “A uniform system of free public schools sufficient for the education of, and open to, all the children of school age in the state shall be established and maintained.”  Those suits addressed issues of students burdened by poverty and/or lack of fluency in English and specifically, in the suit filed by the Mexican American Legal Defense and Educational Fund, insufficient funding in the district composed of schools in  the Albuquerque, Gadsden, Las Cruces, Magdalena, Santa Fe, Zuni and Espanola school districts.

Bankruptcy Judge Shows Reach of Automatic Stay

One of the prominent features of federal bankruptcy procedure is the automatic stay of all lawsuits or civil actions against the debtor. When a person or company files for bankruptcy protection, whether it be a Chapter 7 liquidation, a Chapter 13 individual bankruptcy or a Chapter 11 corporate reorganization, the bankruptcy court automatically issues the stay immediately against most civil cases although the law does provide for certain enumerated exceptions for policy reasons (such as a case for child support by a former spouse). In a case pending in the state of Delaware – the home of many national corporations which operate primarily in other states- a federal bankruptcy judge just ruled that the bar applies to a state court case in California involving the disposition of some insurance proceeds where the debtor itself is not even a party.

Class Action Filed Against Blue Cross and Blue Shield of New Mexico’s Parent Corporation

A case filed today against the nonprofit parent company of Blue Cross and Blue Shield of New Mexico raises the question of whether the company breached its duties to the members of the non-profit institution. A class action lawsuit on behalf of the members of the non-profit Health Care Service Corp (HCSC) – which owns Blue Cross and Blue Shield of New Mexico as well as similar health insurance companies in Illinois, Oklahoma, Montana and Texas – alleges that HCSC between 2011 and 2013 remitted nearly $96 million in bonuses to its top ten executives and that during that period it cumulatively earned more than $4 billion in net income from operations.

US Forest Service and Sandia Pueblo Reaches Land Deal

After a decade of negotiations and the passage of legislation to approve the deal, Sandia Pueblo and the US Forest Service will implement a land swap which will protect some of the lands in perpetuity so that certain tribal residents can use the land for religious purposes.  The federal land service will convey a roughly 700-acre parcel of land on the west face of the Sandia Mountains near Placitas over to the pueblo. In exchange, Sandia Pueblo will swap about 160 acres of land along the Piedra Lisa Trail, which the Forest Service will maintain as a conservation easement, plus a 70-acre parcel called the La Luz Tract that abuts the La Luz Trail. 

Further Mediation Required in Light Squared’s Chapter 11 Bankruptcy Case

U.S. Bankruptcy Judge Shelley Chapman ordered the parties in the Chapter 11 bankruptcy action concerning LightSquared, Inc. back to mediation after earlier this month rejecting the proposed plan for the company to exit bankruptcy. LightSquared is a wireless-spectrum company controlled primarily by hedge-fund owner, Phillip Falcone.

Horse Trading That May be Non-Dischargeable under Chapter 7

For a Chapter 7 bankruptcy debtor, multiple horse trades and a subsequent filing of a bankruptcy petition may not be enough to avoid having to reimburse a dissatisfied rodeo roper. Mr. Raymond Siggins sold a horse named “IV” to Benjamin Bates who intended to ride IV in roping competitions. When the horse was found by Mr. Bates to be lame, Siggins agreed to give Bates a different horse. When this horse as well was deemed defective for not being saddleworthy, they traded again. And after Mr. Bates found this horse to have multiple medical issues, he demanded financial compensation instead of a replacement horse. When Siggins refused his demand, Bates sued him in New Mexico’s Twelfth Judicial District Court. In this state court lawsuit, the parties eventually entered in to a stipulation whereby Siggins agreed to pay Bates the sum of $13,000 by July 1, 2011. In the event he so failed, Bates would be entitled to a judgment for the amount, plus interest and court costs.

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