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Over the past three decades, there has been a tug-of-war between
Manhattan and Wilmington, Del., over bankruptcy court cases, with each
gaining dominance for a period of years before relinquishing the title
to the other. It looks like the start of another shift, with Wilmington
regaining favor.
Lately, more and more companies have been filing for bankruptcy protection in Delaware. Some of the largest filings of the year in the U.S., including Tropicana Entertainment LLC (assets of $2.84 billion and liabilities of $2.43 billion) and SemGroup LP (assets of $6.14 billion and liabilities $7.53 billion), have chosen Wilmington over Manhattan. In fact, the last big Manhattan bankruptcy filing came on July 9, when Steve & Barry's LLC filed for Chapter 11 with assets of $693.5 million and liabilities of $638 million. Since then, there's been the SemGroup filing (July 22) and other notable ones: ProxyMed Transaction Services Inc. (July 23), DynAmerica Manufacturing (July 18), American Color Graphics Inc. (July 15), Vertis Inc. (July 15) and Pierre Foods Inc. (July 15). Manhattan has gotten some pretty good-sized filings this year, such as Frontier Airlines Holding Inc. (assets of $98.3 million and liabilities of $92.2 million), Fred Leighton Holding Inc. (assets and liabilities of $100 million), EOS Airlines Inc. (assets of $70.2 million and liabilities of $34.8 million) and Lexington Precision Corp. (assets of $52.7 million and liabilities $88.7 million). But nothing like the lineup Wilmington has. Delaware now has a veritable Murderer's Row of bankruptcies, with American Color Graphics Inc. (assets of $214.9 million and liabilities $499.3 million), Vertis (assets of $523 million and liabilities $1.3 billion), Linens Holding Co. (assets of $1.7 billion and liabilities of $1.4 billion) and Whitehall Jewelers Inc. (assets of $207.1 million and liabilities of $185.4 million). When The Deal looked at this issue in its May 12 issue of Bankruptcy Insider, Manhattan appeared to have the upper hand. How quickly things can change, especially in the world of bankruptcy. But that begs the question: Why Delaware, and why now? There's never really been a clear reason for the shifts in this rivalry. Both benches are well-respected, after all. And the amount of corporate case law in both places is deep. Sometimes it's been because of overcrowded dockets (leading filings back to New York) or because one huge case made a filing and others then followed (leading filings to Delaware when Continental Airline Holdings filed there and, in 2001, starting a wave of petitions in Manhattan after Enron Corp.'s filing). But one thing's for sure. The venue in vogue now at some point won't be, and vice versa. - Jamie Mason Categories Deal Video
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