In re SONICblue
United States Bankruptcy Court for the Northern District of California
2007 WL 926871 (2007)
- Written by Ryan Hill, JD
Facts
SONICblue, Inc. (Sonic) (debtor) made electronic products. Pillsbury Winthrop Shaw Pittman LLP (Pillsbury) was Sonic’s counsel. Sonic raised $75 million through the issuance of bonds, and the bonds were later purchased by three institutional bondholders. In its capacity as Sonic’s counsel, Pillsbury provided the bondholders with a written opinion letter attesting to the quality of the bonds. Sonic shortly thereafter filed for bankruptcy. Pillsbury applied to serve as Sonic’s bankruptcy counsel and was approved by the court. Pillsbury filed multiple disclosure statements describing any potential conflicts, but none of the statements mentioned the opinion letter Pillsbury had written for the bondholders. In the bankruptcy, Pillsbury assisted Sonic in challenging the bondholders’ claims. The bondholders demanded that Pillsbury defend and indemnify the bondholders for any losses resulting from the challenge, because Pillsbury issued a favorable opinion letter about the bonds. Pillsbury transferred the bondholder’s challenge to counsel for the unsecured creditors committee. Pillsbury did not, however, file a supplemental disclosure regarding the conflict.
Rule of Law
Issue
Holding and Reasoning (Morgan, J.)
What to do next…
Here's why 811,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 46,300 briefs, keyed to 988 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.
