Brookstone Holdings Corp., along with nine subsidiaries and affiliates, has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Lead Case No. 18-11780).  Headquartered in Merrimack, New Hampshire, Brookstone is a well-known developer and retailer of wellness, entertainment and travel products.  Brookstone previously filed for Chapter 11 protection in Delaware on April 3, 2014 (Lead Case No. 14-10752) and sold all of its assets to Sailing Innovation Inc., an acquiring entity formed by a consortium of Chinese investors.  According to the First Day Declaration, Brookstone enters Chapter 11 having secured $30 million in DIP Financing from Wells Fargo Bank, NA, and Gordon Brothers Finance Company.  The First Day Declaration further explains that Brookstone intends to close unprofitable stores and pursue a sale of substantially all of its remaining assets pursuant to section 363 of the Bankruptcy Code.  Omni Management Group is the proposed claims and noticing agent.  The cases have been assigned to the Honorable Brendan Linehan Shannon.

Contact Norman L. Pernick, G. David Dean or Myles R. MacDonald for more information regarding this matter.  Please note, however, that Cole Schotz P.C. does not represent the debtors in these cases and cannot respond to questions directed toward the debtors.

Upcoming Committee Formation Meeting:  Wednesday, August 8 10:00 AM

Case Name: 18-11736 (KG)

Location: Delaware State Bar Association, 405 King Street, 2nd Floor, Wilmington, DE 19801

Notice of Formation Meeting for Official Committee of Unsecured Creditors can be found here. See the petition for relief.

Contact Norman L. Pernick, G. David Dean or Myles R. MacDonald for more information regarding this matter.

Heritage Home Group LLC, along with four subsidiaries and affiliates, has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Lead Case No. 18-11736).  Heritage, based in High Point, North Carolina, was formed in November 2013 by KPS Capital Partners to acquire the assets of Furniture Brands International through a sale under Section 363 of the Bankruptcy Code in Furniture Brands International’s 2013 Chapter 11 filing (Lead Case No. 13-12329).  According to the First Day Declaration, Heritage has filed as a result of strong economic headwinds and declining sales.  Heritage enters Chapter 11 having secured $98 million in Debtor-in-Possession financing from PNC Bank, and intends to sell substantially all of its assets under Section 363 of the Bankruptcy Code.  Kurtzman Carson Consultants in the proposed claims and noticing agent.  The cases have been assigned to the Honorable Christopher S. Sontchi.

Contact Norman L. Pernick, G. David Dean or Myles R. MacDonald for more information regarding this matter.  Please note, however, that Cole Schotz P.C. does not represent the debtors in these cases and cannot respond to questions directed toward the debtors.

Upcoming Committee Formation Meeting:  Wednesday, August 1 10:00 AM

Case Name: 18-11699 (MFW)

Location:The Doubletree Hotel, 700 King Street, Wilmington, DE 19801

Notice of Formation Meeting for Official Committee of Unsecured Creditors can be found here. See the petition for relief.

Contact Norman L. Pernick, G. David Dean or Myles R. MacDonald for more information regarding this matter.

The NORDAM Group, Inc., along with four affiliates and subsidiaries, has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Lead Case No. 18-11699).  NORDAM, based in Tulsa, OK, is a manufacturer of aerospace components and provider of aerospace maintenance, repair and overhaul services.  According to the First Day Declaration, NORDAM filed the Petition as a result of incurring substantially higher than expected costs in performing under a long-term manufacturing agreement with Pratt & Whitney Canada Corporation.  NORDAM is seeking approval of $45 million in Debtor-in-Possession Financing to be provided by its pre-petition senior lenders, with J.P. Morgan serving as DIP Agent.  Epiq is the proposed claims and noticing agent.  The cases have been assigned to the Honorable Mary F. Walrath.

Contact Norman L. Pernick, G. David Dean or Myles R. MacDonald for more information regarding this matter.  Please note, however, that Cole Schotz P.C. does not represent the debtors in these cases and cannot respond to questions directed toward the debtors.

On Jun 29, 2018, Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York issued an opinion in which he granted a motion for entry of default  judgment against foreign adversary proceeding defendants.  Peter Kravitz v. Deacons (In re Advance Watch Company, Ltd.), Case No. 17-01137 (MG). The plaintiff, a trustee of a creditor trust, sought to recover preferential transfers from three Hong Kong defendants pursuant to Sections 547 and 550 of the Bankruptcy Code.  The defendants were served personally with the summons and complaint at their Hong Kong address by a bailiff’s assistant of the High Court of Hong Kong.  The defendants’ secretary accepted service of process.  When none of the defendants answered or otherwise responded to the complaint, plaintiff moved for entry of default against each of them.  The certificate of default, the motion for entry of default and notice of presentment of default (the “Default Papers”) were served on each defendant in Hong Kong by U.S. Mail.  The defendants did not respond to or otherwise appear in connection with the Default Papers.  Accordingly, plaintiff moved for entry of default  judgment in accordance with Rule 55(a) of the Federal Rules of Civil Procedure (the “Civil Procedure Rules”) and Rule 7055 of the Federal Rules of Bankruptcy Procedure.

Judge Glenn’s analysis commenced with a review of his 2012 decision in Executive Sounding Board Assocs. v. Adv. Machine & Engineering Co. (In re Oldco M. Corp.), 484 B.R. 598 (Bankr. S.D.N.Y. 2012).  There, he concluded that “the failure to respond to a properly served adversary complaint constitute[s] implied consent for the entry of a final judgment by a bankruptcy judge,” such that “a bankruptcy judge has the constitutional authority to enter a final default judgment when the defendant fails to respond to the complaint.”  Id. at 612.  Judge Glenn then held in Oldco M. that implied consent was based on language in the summons expressly advising of the consequences of failing to respond to the complaint.  Id. In Advance Watch, Judge Glenn validated the holding of Oldco M. notwithstanding the Supreme Court’s decision in Wellness Int’l Network, Ltd. v. Sharif, 135 S.Ct. 1432 (2015), saying he “continues to believe that the analysis in Oldco M. Corp. is correct, permitting the Court to enter default judgments in all adversary proceedings in which a defendant has failed to respond to a properly served summons and complaint.”

Judge Glenn then examined whether the defendants, who all are domiciled in Hong Kong, were served properly.  Civil Procedure Rule 4(f)(1) provides that service on an individual in a foreign country may be obtained “by any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents.”  In turn, courts have held that service on a foreign defendant in a signatory country must be accomplished pursuant to the Hague Convention.  Because Hong Kong is a Special Administrative Region of China, and China and the U.S. are both signatories to the Hague Convention, the Hague Convention applies to the Hong Kong defendants.

Judge Glenn found that service of the preference complaints on the defendants at issue was effectuated in accordance with The Hague Convention and Hong Kong’s High Court rules.  He also determined that plaintiff correctly served the defendants with the Default Papers.  Judge Glenn concluded that because plaintiff did everything “by the book,” he would enter default judgment in the amount requested.

Upcoming Committee Formation Meeting:  Thursday, July 26, 201810:00 AM

Case Name: 18-11659 (LSS)

Location: U.S. Trustee Office, 844 King Street, Suite 3209, Wilmington, DE 19801

Notice of Formation Meeting for Official Committee of Unsecured Creditors can be found here. See the petition for relief.

Contact Norman L. Pernick and G. David Dean for more information.

Active Care, Inc., and its wholly-owned subsidiary 4G Biometrics, LLC, have filed petitions for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Lead Case No. 18-11659).  In its Petition, Active Care, a health analytics and reporting company for people with diabetes based in Orem, Utah, reports an estimated $1–$10 million in assets and $10–$50 million in liabilities.  According to the First Day Declaration, while Active Care has had ongoing financial difficulties for years, its filing was primarily driven by the loss of approximately 50% of Active Care’s individual clients when the State of Louisiana end its relationship with Active Care.  The First Day Declaration further explains that Active Care enters Chapter 11 intending to sell substantially all of its assets under Section 363 of the Code with Telcare, LLC, serving as the stalking horse purchaser.  Telcare is a subsidiary of Biotelemetry, Inc., Active Care’s largest unsecured creditor and a key supplier.  Active Care also enters Chapter 11 having secured $800,000 in DIP Financing from its pre-petition senior lender, Partners for Growth IV, L.P.  A claims and noticing agent has not yet been proposed.  The cases have been assigned to the Honorable Laurie Selber Silverstein.

Contact Norman L. Pernick, G. David Dean or Myles R. MacDonald for more information regarding this matter.  Please note, however, that Cole Schotz P.C. does not represent the debtors in these cases and cannot respond to questions directed toward the debtors.

Upcoming Committee Formation Meeting:  Friday, July 20, 2018 11:00 AM

Case Name: 18-11625 (KJC)

Location: U.S. Trustee Office, 844 King Street, Suite 3209, Wilmington, DE 19801

Notice of Formation Meeting for Official Committee of Unsecured Creditors can be found here. See the petition for relief.

Contact Norman L. Pernick and G. David Dean for more information.

Tintri, Inc., a Mountain View, California-based enterprise cloud storage company, has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Case No. 18-11625).  According to the First Day Declaration, Tintri was founded in 2008 and serves customers in a variety of industries, including leaders such as Avaya, Comcast, SONY, Toyota, Chevron, NASA, and AMD.  The Debtor has been engaged in pre-petition marketing efforts and intends to sell its assets as a going concern through the bankruptcy process.  The Debtor is also seeking the approval of debtor-in-possession financing in a maximum aggregate amount of $5.5MM.  No judge has been assigned to this case at the time of publication.

Contact Norman L. Pernick or G. David Dean  for more information regarding this matter.  Please note, however, that Cole Schotz P.C. does not represent the debtors in these cases and cannot respond to questions directed toward the debtors.