Daily Archives: November 15, 2004

Supreme Court declines to hear Kmart “key vendor” case

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The Supreme Court declined on Monday to consider whether retailer Kmart Corp. should have been allowed to pay more than $300 million to about 2,500 “key vendors” immediately after filing its chapter 11 case in January, 2002.
The Kmart case stemmed from Kmart’s decision immediately after the filing of its chapter 11 case to request that the Bankruptcy Court approve emergency payments to its key vendors (including over 1,000 newspapers) on the grounds that such payments were essential to preserving Kmart’s going concern value for the ultimate benefit of all of its creditors.
Absent such payments, key vendors of bankrupt companies often refuse to do business and provide trade credit with a debtor even though their post-bankruptcy claims receive a higher priority of payment than pre-petition unsecured claims. Bankruptcy Courts often authorize such payments to key vendors, and the Bankruptcy Court in Kmart’s case elected to do so.
However, the District Court and the the 7th U.S. Circuit Court of Appeals reversed the Bankruptcy Court’s key vendor ruling and held that Kmart had failed to establish that business from its designated key vendors was any more necessary to the survival of Kmart than business from certain companies that were excluded from key vendor status.
The effect of the Supreme Court’s refusal to review the 7th Circuit’s decision is that the lower courts remain split on the issue of key vendor payments. Some courts deny such payments on the grounds that the Bankruptcy Code contemplates that any such payments to the debtor’s creditors should only be made under a confirmed plan of reorganization. However, the better view is that, under appropriate circumstances, a debtor should be allowed to pay key vendors at the outset of a case to hedge the risk that the debtor would otherwise meltdown into liquidation to the detriment of creditors before a reorganization plan can even be proposed.
Kmart’s “key vendor” motion was unusally aggressive and neither the 7th Circuit’s decision nor the Supreme Court’s refusal to review that decision prevents a Bankruptcy Court from approving key vendor payments under appropriate circumstances. But it is clear that from these rulings that debtors will be required to tailor such key vendor programs more carefully than Kmart did.

Football is taken seriously in the Big 12

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This earlier post referenced Kansas Coach Mark Mangino’s comments after Saturday’s controversial ending to the Texas-Kansas game in which Coach Mangino alleged that the officials were favoring UT to preserve the Horns’ stature for a lucrative Bowl Championship Series Bowl game.
Well, it turns out that Lawrence, Kansas was not the only place where passions were bubbling out of control in Big 12 country this past Saturday. This article from Husker.com indicates that Darren DeLeone, a 6’4″, 315 lbs. offensive tackle hauled off and whacked a member of of the Oklahoma spirit before Saturday’s Nebraska-OU game in Norman:
During pregame warmups, an incident allegedly occurred involving Nebraska offensive lineman Darren DeLone and a member of the Ruf/Neks, an Oklahoma sideline spirit group.

According to Sunday’s editions of The Oklahoman, Adam Merritt, a Ruf/Nek, was transported from Owen Field on a medical cart and taken to Norman (Okla.) Regional Hospital after having several teeth knocked out and suffering facial lacerations in what witnesses described as an assault by the 6-foot-4, 315-pound DeLone.
Merritt was treated and released before the game ended.
DeLone was not arrested and was allowed to leave the stadium with the team, according to The Oklahoman.
The Nebraska athletic department Sunday released a prepared statement saying it was “aware of a collision that occurred on the field of play during the official pregame warmup period.”
The one-paragraph statement ? which doesn’t identify DeLone or any other Husker player ? said several members of the Nebraska football team, including two coaches, “witnessed the collision and immediately summoned a member of Nebraska’s medical staff to assist. Players and coaches spoke with officials immediately following the game.”
The Nebraska athletic department and football team “are sorry the accident happened and wish the young man a quick and full recovery,” the statement said.

However, there might just be more to the story than the Nebraska officials are letting on:

According to The Oklahoman, witnesses in the Sooner student section at Owen Field and on the sideline said DeLone head-butted Merritt in the face with his helmet and shoved him into the 3-foot brick wall.

Well, I guess that could be construed as a “collision.”
But that was only the “before game” incident. After the game, Nebraska coach Bill Callahan came unhinged as he was leaving the field and began yelling obscenities at several boistrous OU fans. The AP wire story on the incident relates the following:

While acknowledging he used a poor choice of words in a profane outburst directed at Oklahoma fans Saturday, Nebraska coach Bill Callahan said he was upset because a group of hecklers were allowed so close to his players during warmups and oranges were thrown onto the field late in the game.
As he walked toward the Nebraska locker room after a 30-3 loss, Callahan looked into the stands and called OU fans “[expletive] hillbillies.”
“I’m an emotional guy, and I’m a competitive coach, and on the field I stick up for my players,” Callahan said Monday on the Big 12 coaches teleconference. “I don’t think any team should be subjected to the type of treatment we were subjected to in that particular contest.”
Callahan also said he could not comment on what Nebraska called a
“collision” between a player and an Oklahoma student fan incident because the coach did not see it.

Welcome to the Big 12, Coach Callahan.

The effect of the Swift Boat Vets

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One of the stories from the just completed Presidential campaign that historians will debate for many years is the effect that the Swift Boat Veterans had on the just completed Presidential campaign. Here are earlier posts on the Swift Boat Veterans.
This John Fund article on OpinonJournal.com is a useful review of the story of these Vietnam veterans groups that raised doubts during the campaign about John Kerry’s fitness to serve as commander in chief. The setting for the story is the Restoration Weekend, an annual gathering of political activists that David Horowitz organizes. Mr. Horowitz is a former left-wing radical who opposed the Vietnam War effort as an editor of Ramparts magazine, but who is now conservative writer and political activist.
The article does a good job of summarizing the Swift Boat Veterans’ activities during the campaign, and includes the following insightful observation:

As the evening proceeded and one Vietnam veteran after another shared the story of how veterans felt compelled to attack Mr. Kerry for his 1971 testimony branding fellow veterans as war criminals, former CBS News correspondent Bernard Goldberg leaned back in his chair in amazement.
“I think some of them are too intense,” he told me. “But screwing with these guys by accusing them of atrocities was one of the biggest mistakes John Kerry ever made. Thirty years later he woke a sleeping giant.”

Read the entire piece.