Main Case: In re: Capsule International Holdings, LLC (f/k/a Constar International Holdings, LLC) et al.; Bankr. Case No. 13-13281 (CSS)
Plaintiff: The Official Committee of Unsecured Creditors of Capsule International Holdings, LLC
On December 16th and 17th, 2015, the Official Committee of Unsecured Creditors of Capsule International Holdings, LLC (the “Committee”) filed approximately 80 actions (the “Avoidance Actions”) pursuant to Sections 547 through 550 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).
Constar International Holdings, LLC (now Capsule International Holdings, LLC) and its nine subsidiaries (collectively, the “Debtors”) were U.S. and U.K. producers of polyethylene terephthalate (“PET”) plastic containers for food and beverages. According to the Declaration of J. Mark Borseth in Support of Chapter 11 Petitions and First Day Pleadings [Docket No. 17], demand for the Debtors’ PET product decreased significantly due to a shift to self-manufacturing by the Debtors’ largest customer, Pepsi-Cola Advertising and Marketing, Inc. (“Pepsi”). By December 31, 2012, Pepsi was no longer a customer of the Debtors. The loss of the Pepsi revenue, in conjunction with a general decline in customer demand, created a liquidity problem that ultimately resulted in the third Constar chapter 11 bankruptcy since December, 2008.
On December 19, 2013 (the “Petition Date”), the Debtors filed with the Bankruptcy Court voluntary petitions for relief under chapter 11 of the Bankruptcy Code. On January 16th, 2013, the Final Order (A) Authorizing the Debtors to Obtain Post-Petition Financing and Grant Security Interests and Superpriority Administrative Expense Status Pursuant to 11 U.S.C. §§ 105, 364(c) and 364(d) (B) Modifying the Automatic Stay Pursuant to 11 U.S.C. § 362; and (C) Authorizing the Debtors to Enter into Agreements with Each of Wells Fargo Capital Finance, LLC, as Revolving Agent, and Black Diamond Commercial Finance, L.L.C., as DIP Note Agent (the “Final DIP Order”] [Docket No. 212] was entered by the Bankruptcy Court, granting the Committee standing to commence, prosecute, and compromise all of the Debtors’ Avoidance Actions.
On January 10, 2014, the Bankruptcy Court entered orders approving the stalking horse asset purchase agreement and bidding procedures for the auction and sale of the Debtors' U.S. and U.K. assets [Docket Nos. 185, 187]. On February 6, 2014, the Debtors conducted the auction for their assets. On February 10 and 11, 2014, the Bankruptcy Court entered orders approving the Debtors' asset sales [Docket Nos. 350 and 357]. On February 14, 2014, the UK asset sale closed [See Docket No. 369], and on February 27, 2014, the US asset sale closed.
It appears that prior to retaining ASK LLP as special counsel to pursue the Avoidance Actions, the Committee sent out demand letters to potential defendants. However, on November 13, 2015, the Bankruptcy Court entered an order approving ASK LLP as special counsel to pursue the outstanding Avoidance Actions [Docket No. 1077].
The substance of the Complaints reviewed thus far is somewhat standard. The Preference Period is identified as between September 20, 2013 and December 19, 2013. The Committee does assert fraudulent conveyance claims under Section 548, relying solely on the recitation of the statutory language, as well as claims for unauthorized post-petition transfers pursuant to Section 549. The Committee’s Exhibit A attempts to identify check numbers, check amounts, and the clear date, as well as the specific invoice information.
The Honorable Christopher S. Sontchi is presiding over the Debtors’ cases.
Prime Clerk, LLC is the claims agent for Capsule International Holdings, LLC.
ASK LLP is acting as Special Counsel to the Committee.
R. Grant Dick IV