This daily APScans report covers all recent docket entries in the adversary proceedings brought by Alfred T. Giuliano, Chapter 7 Trustee for the Bankruptcy Estates of Sunset Aviation, Inc., et al. for recovery of avoidable transfers under Chapter 5 of the Bankruptcy Code, including preferential transfers under Section 547 (bankruptcy preferences).
Pre-Applied Filters: The following filings are not included in the "Current" APScan: certificates or affidavits of service, receipts for filing fees and other clerical matters.
Not For Individual Docket Monitoring: Pre-applied filters may eliminate important notices and certificates. A party to an adversary proceeding must not consider APScans to be a substitute for reviewing the docket of the proceeding in which it is a defendant.
This APScans is updated daily to cover filings made as of midnight on the previous day. This APScans covers filings ENTERED during the period from August 01, 2015 through September 29, 2015. .
09/07/2011 - Courts Memorandum Opinion with Respect to Shorenstein Company LLCs Motion to Dismiss with Prejudice the Chapter 7 Trustees Complaint filed in AP No.: 11-50965 - Defendant Shorenstein Company LLC -
Judge Walsh rejects the trustee's contention that an order for substantive consolidation is retroactively effective when it does not expressly provide that it is nunc pro tunc. He also rejects the underlying premise of the trustee's argument stating: "I do not think it appropriate to use a nunc pro tunc order to rewrite § 547, which is what the Trustee is seeking to do here by extending the preference period beyond 90 days."
07/27/2011 - Defendant's Reply in Further Support of Its Motion to Dismiss with Prejudice filed in AP No.: 11-50965 - Defendant Shorenstein Company LLC -
In defense of its motion to dismiss a preference complaint, Defendant hammers the Chapter 7 Trustee's response as presenting "mere smokescreens" for the Trustee's failure to seek nunc pro tunc relief in the motion for substantive consolidation. Defendant also strikes out at the "equality for creditors" rhetoric pervading the Trustee's response: "Moreover, it is Plaintiffs special counsel, retained on a contingency basis, who stands to benefit most from the very interpretation of the Substantive Consolidation Order Plaintiff seeks, not Shorenstein nor the consolidated estates."
07/11/2011 - Plaintiff's Memorandum of Law in Opposition to Shorenstein Company LLCs Motion to Dismiss filed in AP No.: 11-50965 - Defendant Shorenstein Company LLC -
Plaintiff Alfred T. Giuliano, Chapter 7 Trustee, opposes the Defendant's motion to dismiss a bankrutpcy preference complaint arguing that the Third Circuit has not addressed the proper calculation of the preference period following the entry of a substantive consolidation order that is "silent" as to its nunc pro tunc effect on avoidance actions.
05/19/2011 - Defendant's Motion to Dismiss filed in AP No.: 11-50964 - Defendant Bay Jet LLC - Adds a motion to strike under 12(f) and brings to a total of 15 the motions to dismiss in Sunset Aviation based on the failure of the Substantive Consolidation Order to be issued nunc pro tunc. 05/12/2011 - Defendant's Motion to Dismiss filed in AP No.: 11-50885 - Defendant Duquesne Aviation, Inc -
This brings to a total of 13 the motions to dismiss in Sunset Aviation based on the failure of the Substantive Consolidation Order to be issued nunc pro tunc. 05/11/2011 - Defendant's Motion to Dismiss filed in AP No.: 11-50965 - Defendant Shorenstein Company LLC - One more in an ever growing list of motions to dismiss based on the failure of the Substantive Consolidation Order to be issued nunc pro tunc.
Adversary Proceedings Overview
Lead Bankruptcy Case Name (Case Number): Sunset Aviation, Inc. (09-10778)
Bankruptcy Court District (Division): District of Delaware
Petition Date: February 25, 2009 Regal Jets, LLC filed under chapter 11; March 6, 2009, Sunset Aviation, Inc. filed under chapter 7; May 1, 2009, JetDirect Aviation, Inc. under chapter 7; on August 19, 2010 the estates of Regal Jets, LLC, Sunset Aviation, Inc, and JetDirect Aviation, Inc. were substantively Consolidated
Associated Cases: The Associated Debtors are: Regal Jets, LLC, Sunset Aviation, Inc, and JetDirect Aviation, Inc.
Plaintiff: Alfred T. Giuliano, Chapter 7 Trustee for the Bankruptcy Estates of Sunset Aviation, Inc., et al.
Number of Proceedings: 200
When Filed: February 24, 2011
Adversary Proceeding Judge: U.S. Bankruptcy Judge Peter J. Walsh
Plaintiff's Counsel: ASK Financial, LLP (St. Paul MN) through Alex Govze (Lead Attorney); and Cozen O'Connor (Wilmington, DE) through John T. Carroll, III
Avoidance Period: The complaint identifies the preference period as the period "On or within ninety (90) days before the Petition Date, that is between November 27, 2008 and February 25, 2009". Footnote 2 explains that this preference period is applied to all 3 debtors: "For purposes of calculating the Preference Period, the substantively consolidated Debtors share the earliest bankruptcy petition filing date of February 25, 2009."
The Bankruptcy Preference Complaints
The Complaints are standard ASK Financial 5 count complaints... with one significant difference. The complaints explain in a footnote that the same preference period is applied to all 3 debtors: "For purposes of calculating the Preference Period, the substantively consolidated Debtors share the earliest bankruptcy petition filing date of February 25, 2009." The order of substantive consolidation does not purport to make the substantive consolidation retroactive (nunc pro tunc) to the earliest petition date. For some of the defendants, it may be worth pursuing the question whether omission of "nunc pro tunc" language precludes retroactive resetting of the preference period.
The Courts of Appeal for the Ninth and Sixth Circuits have held that substantive consolidation, by its nature, is effective as of the filing date, without any need to make a special showing. See e.g. In re Bonham, 229 F.3d 750, 771 (9th Cir.2000); In re Baker & Getty Financial Services, Inc., 974 F.2d 712, 720 (6th Cir.1992). In Walton v. Post-Confirmation Committee of Unsecured Creditors of GC Companies, Inc., 298 B.R. 226 (Del. 2003), the District Court for the District of Delaware declined to follow the position of the Sixth and Ninth Circuits that retroactive application was inherent in substantive consolidation. However, in Walton the Distict Court affirmed a Bankruptcy Court's refusal to make substantive consolidation retroactive. In contrast, the substantive considation order in Sunset Airlines simply is silent.
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