Order, Report and Recommendation filed in the AFY, INC. Adversary Proceedings by Ainsworth Feed Yards, LLC before Chief, U.S. Bankruptcy Judge Thomas L. Saladino in the United States Bankruptcy Court for the District of Nebraska. Judge Saladino grants defendant’s motion for relief from a $4.5 million judgment based on the U.S. Supreme Court’s decision in Stern v. Marshall. The defendant moved to set aside the judgment entered in the proceeding on June 1, 2011. The Bankruptcy Court had granted the trustee’s motion for summary judgment on the trustee’s efforts to collect approximately $4.5 million on an account receivable allegedly owed to the debtor from defendant. Although not mentioned by Judge Saladino as a factor in his decision, the defendant had not filed a claim in the underlying bankruptcy case. Judge Saladino focused on the nature of the action, concluding “What the trustee is pursuing is a demand on an alleged debt, which is beyond the scope of § 542.”
08/18/2011 – Order filed in the AFY, INC. Adversary Proceedings by Sears before Chief, U.S. Bankruptcy Judge Thomas L. Saladino in the United States Bankruptcy Court for the District of Nebraska. Judge Saladino rules on the defendant’s one sentence motion to dismiss for “lack of subject matter jurisdiction” in light of Stern v. Marshall. In this turnover action under 28 U.S.C. § 157(b)(2)(E), the Court finds that the action is a core proceeding. Accordingly, the bankruptcy court “is not deprived of subject matter jurisdiction simply because resolution of the lawsuit may require the application of state law.”
08/18/2011 – Order, Report and Recommendation filed in the AFY, INC. Adversary Proceedings by Sears Cattle Co. et al before Chief, U.S. Bankruptcy Judge Thomas L. Saladino in the United States Bankruptcy Court for the District of Nebraska. Judge Saladino grants defendant’s motion to set aside a judgment entered on July 6, 2011, granting the trustee’s claim for collection of an account receivable in the amount of $291,937. Judge Saladino acknowledges that the claim falls within the scope of § 542(b). However, he characterizes the claim as a “collection action”. Applying, the Supreme Court’s decision of Stern v. Marshall, Judge Saldino holds that “[b]ecause this action does not arise under Title 11 or arise in the bankruptcy case itself, nor would it be resolved in the claims allowance process, it is not a core proceeding within the constitutional authority of the bankruptcy court to enter judgment.” The key portions of Judge Saladino’s decision follow.
08/19/2011 – Memorandum of Law in Support of Defendant’s Motion to Dismiss filed in the WL Homes Adversary Proceedings by Time Warner Cable before U.S. Bankruptcy Judge Brendan L. Shannon in the District of Delaware filed by Saul Ewing LLP attorney Lucian B. Murley and Wargi & French LLP attorney Julie C. Jared. Defendant Time Warner Cable Inc. files this motion to dismiss and for sanctions under 28 U.S.C. § 1927 based on Plaintiff’s continued prosecution of a preference action less than the 11 U.S.C. § 547(c)(9) jurisdictional limit. Nothing new in terms of law but the facts alleged are extreme even for mass preference actions.
08/19/2011 – Defendant’s Reply in Support of Motion to Dismiss filed in the Spansion, Inc. Adversary Proceedings by Barclays Capital Inc. before Chief, U.S. Bankruptcy Judge Kevin J. Carey in the District of Delaware filed by Richards, Layton & Finger, P.A. (Wilmington, DE) attorneys Robert J. Stearn, Jr. and Amanda R. Steele.
Defendant had nothing to rebut in this reply brief. The sole objective of the reply was to assure that the focus remained on the gross deficiencies of the fraudulent transfer claim in the existing complaint.
08/18/2011 – Order filed in the Sharon Vernell Cofield Adversary Proceedings by Cofield et al before U.S. Bankruptcy Judge Randy D. Doub in the United States Bankruptcy Court for the Eastern District of North Carolina. Eastern District of South Carolina, U.S. Bankruptcy Judge Randy D. Doub holds that under Stern v. Marshall, 564 U.S.—, 131 S. Ct. 2594, 252011 WL 2472792 (June 23, 2011), the Court has authority to render a final judgment in the pending adversary proceeding. Judge Doub found that, in determining the amount and dischargeability of Plaintiffs claim, “[t]he alleged breach of contract defense is so intertwined with the Plaintiff’s claim, that consideration of the facts and circumstances of the breach of contract defense is necessary to determine the outcome of this proceeding.”
Lehman Brothers Holdings Inc. et al v. JPMorgan Chase Bank, N.A. (In re Lehman Commercial Paper Inc. Case No. 08-13555), Adv. Proc. No. 10-03266 (Bankr. S.D.N.Y. August 15, 2011) : Southern District of New York, United States Bankruptcy Judge James M. Peck issues this Case Management Order in Relation to the Impact of Stern v. Marshall following the receipt of briefing from Plaintiff Lehman Brothers Holdings and Defendant JPMorgan Chase Bank on the impact of the U.S. Supreme Court’s decision in Stern. Far more than a “case management order”, Judge Peck indicates his initial impressions of the Stern decision. Among the most significant of Judge Peck’s statements is his conclusion that: “JPMorgan reads Stern broadly—too broadly, in the Court’s view. The JPMorgan position paper argues that unless Plaintiffs move promptly to withdraw the reference, the Amended Complaint should be dismissed. JPMorgan is wrong: Stern does not support dismissal.”
08/12/2011 – Plaintiff’s Memorandum of Law in Opposition to Motion to Dismiss filed in the Spansion, Inc. Adversary Proceedings by Barclays Capital Inc. before Chief, U.S. Bankruptcy Judge Kevin J. Carey in the District of Delaware filed by Eckert Seamans Cherin & Mellott LLC (Wilmington, DE) attorney Ronald S. Gellert; ASK Financial LLP (St. Paul, MN) attorneys Joseph L. Steinfeld, Jr. and Karen M. Scheibe .
Pirinate Consulting Group, LLC, Claims Agent (the “Plaintiff”) for the Chapter 11 Estates of Spansion, Inc., et al. (the “Debtors”), filed this opposition to the Motion to Dismiss (the “Motion to Dismiss”) filed by defendant, Barclays Capital Inc. (the “Defendant”). Plaintiff is in the awkward position of requesting leave to amend its complaint to preserve its fraudulent conveyance count by alleging that the $1.5 million “preferential payment” to the Defendant was actually a retainer that was not fully earned. With no effort made to support a contention that the original complaint adequately alleged a constructive fraudulent transfer, practically the entire brief is premised on a proposed amended complaint. The real question presented by this brief is whether Chief, U.S. Bankruptcy Judge Kevin J. Carey will grant leave to amend. While the Plaintiff is unapologetic as to the deficiencies in the original complaint, the Plaintiff forcefully argues that it has a good fraudulent conveyance case … if the amended complaint is allowed.
Defendant’s Motion to Dismiss filed in the Spansion, Inc. Adversary Proceedings by Barclays Capital Inc. before Chief, U.S. Bankruptcy Judge Kevin J. Carey in the District of Delaware filed by Richards, Layton & Finger, P.A. (Wilmington, DE) attorneys Robert J. Stearn, Jr. and Julie A. Finocchiaro.
Defendant Barclays Capital Inc. (“Defendant”), filed this motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) seeking dismissal of only the counts of the complaint based on claims of constructive fraudulent transfer pursuant to 11 U.S.C. § 548(a)(1)(B), authorized post-petition transfer under 11 U.S.C. § 549, and disallowance of claims pursuant to 11 U.S.C. § 502(d) and (j). The preferential transfer count pursuant to to 11 U.S.C. § 547 is left alone. The complaint was filed by plaintiff Pirinate Consulting Group, LLC (“Plaintiff”), Claims Agent for the bankruptcy estates of Spansion, Inc., et al. (the “Debtors”). This brief was filed back in April, 2011, and on its face, this simple, seven page brief is unimpressive. Its tactical brilliance was only revealed by Plaintiff’s August 12, 2011 response.
08/12/2011 – Memorandum of Law in Support of Defendant’s Motion to Dismiss filed in the Linens n Things Adversary Proceedings by Liberty Mutual Insurance Company before U.S. Bankruptcy Judge Christoper S. Sontchi in the District of Delaware filed by Seitz, Van Ogtrop & Green, P.A. (Wilmington, DE) attorney R. Karl Hill; and Choate Hall & Stewart LLP (Boston, MA) attorneys Douglas R. Gooding and Mark A. DeFeo.
Defendant, Liberty Mutual Insurance Company (“Liberty”) seeks dismissal of a preferential transfer recovery action filed by Charles M. Forman, the Chapter 7 Trustee (the “Trustee”) of the substantively-consolidated estate of Linens Holding Co., et. al. (the “Debtors”). The Trustee seeks to avoid and recover two transfers totaling $419,318. Liberty argues that the Trustee has failed to make the required factual averments with respect to the 547(b)(5) element of an avoidance claim – i.e. that the Defendant received more than it would have received in a Chapter 7 liquidation had the pre-petition transfer not been made. In fact, the Defendant asserts that it was a fully secured creditor. Defendant’s implication is that the complaint would not have been filed if the Trustee had done the investigation necessary to meet the Iqbal/Twombley pleading standards. Registered users click here to see a copy of this brief.