I'm very familiar with the case and have been following that whole situation since September 2008 as a shareholder of preferreds and as an interrested observer trying to learn from one of the most complicated BK cases in history. I still find the Judge's line of reasoning to be broad enough for almost every company with an insolvent balance sheet to argue that "hey, since our stock and bonds still actively trade, we're not hopelessly insolvent." I know that she was ruling on the motion to disband but it was her comments that caught my attention. Those comments have implications, going forward, regardless of what the hearing was about or what the motion was. Anyone who regularly reads court documents will likley see those comments pop up again in the future.
Different courts apply the "hopeless insolvency" standard differently. Some have ruled that shareholder's need only prove that the company is not hopelessly insolvent to satisfy that issue. Others have taken a more hard-line stance such as in re: Williams Communications that "hopeless insolvency" is not the issue but whether there was a " substantial likelihood of a meaningful distribution to equity holders." The latter is what was argued by Debtor's counsel in Chemtura's case. So, based on that, I will still contend that we had much tougher hoops to jump through to get where we are.
