Tag Archives: Bankruptcy

Case of the Day: In re Vivaro Corp.

The case of the day is In re Vivaro Corp. (Bankr. S.D.N.Y. 2015). Vivaro Corp. filed a Chapter 11 petition in the bankruptcy court in 2012. Breezecom FZC and several other parties filed claims in the bankruptcy case, and Vivaro objected to the claims.

There is a split in authority on how objections to claims are to be served on the claimants. Some courts apply FRBP 3007, under which the objection is to be served on the claimant by mail at least 30 days before the hearing on the objection. Other courts apply FRBP 7004, which incorporates FRCP 4. The Vivaro court, for reasons that I won’t get into, decided in today’s case that FRBP 3007 applies in such instances. The interesting point is that the court seemed to think that because FRBP 3007 applied, service by mail was always permissible, while if FRBP 7004 and thus FRCP had applied, then it might be necessary to comply with the Hague Service Convention in case of a foreign claimant.
Continue reading Case of the Day: In re Vivaro Corp.

Case of the Day: Munoz v. Boyard

Christopher Columbus Lands in America
Letters Blogatory wishes its readers a happy Columbus Day!
The case of the day is Munoz v. Boyard (Bankr. E.D.N.Y. 2015). Regis Munoz was a French inventor. He had developed a new battery charger, and he needed capital. So he entered into a partnership agreement with Crisor A. Boyard, under which Boyard would produce and market the invention. Munoz transferred his rights in the invention to the partnership, Avendale Investments, LLP, in return for a 20% stake in the partnership, at 10% interest in a French company, Innov-Nature, and royalties on sales. For his part, Boyard agreed to contribute $250,000 to the partnership.

In 2010, the partnership ceased doing business. Boyard started a new business, Avendale Technology, LLC, to develop the battery charger. Boyard owned 50% of the business and Munoz owned 49%. The operating agreement included an agreement to mediate disputes, and if mediation failed, to arbitrate.
Continue reading Case of the Day: Munoz v. Boyard

Case of the Day: LV Highland Credit Feeder Fund v. Highland Credit Strategies Fund

The case of the day is LV Highland Credit Feeder Fund LLC v. Highland Strategies Fund, LP (Tex. Ct. App. 2015). The plaintiffs were investors in either Highland Credit Strategies Fund, LP, a Delaware limited partnership, or Highland Credit Strategies Fund, Ltd., a Bermuda mutual fund company. The defendants were the two funds as well as Highland Capital Management, LP, which managed the funds, and some of HCM’s executives.

Both the Delaware fund and the Bermuda fund invested in Highland Credit Strategies Maser Fund, LP, a Bermuda limited partnership. The claim was that in 2008, during the financial crisis, the funds began experiencing losses. The plaintiff investors were worried that other investors might begin to redeem their investments, and that due to the long waiting period before investors could receive their money after beginning the redemption process, the funds might not be able to satisfy the plaintiffs’ redemption requests if they waited too long. But, the plaintiffs claimed, the funds fraudulently misrepresented the number of redemption requests they had received, thus inducing the plaintiffs to delay. In October 2008, Highland Capital Management informed all investors that the funds were to be wound down. It proposed a plan of distribution that treated investors who had submitted redemption requests before a certain date more favorably than those who had not. The plaintiffs were in the unlucky group, and so they sued, claiming fraud, breach of fiduciary duty, and breach of Massachusetts’s statute on deceptive trade practices and its blue sky laws (some of the individual investor plaintiffs were from Massachusetts). The funds asserted that the claims of those investors who had invested in the Bermuda fund were barred by a release. The funds offered affidavits tending to prove that the Bermuda fund applied to the Bermuda courts for a “scheme of arrangement to liquidate the fund and pay off its creditors” in accordance with HCM’s plan of distribution. The creditors voted in favor of the scheme, and the Supreme Court of Bermuda approved the scheme. The scheme contained a release of HCM and both funds. The funds also submitted the Bermuda court order to the Texas court, and they moved for summary judgment. The court granted the motion, and the investors appealed.
Continue reading Case of the Day: LV Highland Credit Feeder Fund v. Highland Credit Strategies Fund