Plaintiff’s Answering Brief in Opposition to Defendant’s Motion to Dismiss filed in the Evergreen Solar, Inc. Bankruptcy – U.S. Bank National Association, v. Massachusetts Development Finance Agency (In re Evergreen Solar, Inc.), AP No. 13-50905 Dkt.No. 7 (Bankr. D. Del May 8, 2013 ) before U.S. Bankruptcy Judge Mary F. Walrath filed by ASK LLP (St. Paul, MN) Joseph L. Steinfeld and Kendra K. Bader; Gellert Scali Busenkell & Brown, LLC (Wilmington, DE) Ronald S. Gellert . – Opposition to Motion to Dismiss $1 million preference claim on grounds that Debtor no longer owned or held the preference claim at the time of entering into a release of claims with the Defendant.
The plaintiff trustee and defendant in this fraudulent conveyance action clash on the elemental question of who was the “initial transferee” of payments made by checks issued with the payee left blank. At stake is the availability to Defendants of the “good faith” subsequent transferee defense under Section 550(b)(2). These adversary proceedings arise out of the infamous Ponzi scheme and bankruptcy case of Marc S. Dreier pending in the Southern District of New York (Manhattan) before the Honorable Stuart M. Bernstein.
[Update April 18, 2012: The Honorable Stuart M. Bernstein, United States Bankruptcy Judge for the Southern District of New York sides with the Trustee. The Plaintiff Trustee’s motion for partial summary judgment was granted; the Defendant’s cross motion for partial summary judgment was denied. The three page order generally references the Plaintiff Trustee’s briefing and supporting affidavits but otherwise is without any discussion of the legal issues. LaMonica v. Hemby, Adv. Proc. No. 11-01504 (SMB) Dkt. No. 47 (Bankr. SDNY April 18, 2012).]
On a single day, April 2, 2012, 202 motions (including 108 second motions) to withdraw the reference were filed in the Madoff SIPA adversary “claw back” proceedings. This spike brought to 983 the number of motions were filed by defendants seeking to have their cases heard by the U.S. District Court, rather than the U.S. Bankruptcy Court, for the Southern District of New York. Out of the 1140 Madoff adversary proceedings, defendants in 760 have sought transfer to the District Court.
02/28/2012 – Trustees Memorandum of Law in Opposition to Motions to Dismiss filed in the Madoff Adversary Proceedings by Trotanoy Investment Company Ltd. et al before in the Southern District of New York (Manhattan) filed by Baker & Hostetler LLP (New York, NY) attorneys David J. Sheehan, Deborah H. Renner, Sarah Jane T.C. Truong, Samir K. Ranade, Sammantha E. Clegg, Constantine P. Economides and David Choi.
Irving H. Picard, as trustee (the “Trustee”) for the substantively consolidated liquidation of the business of Bernard L. Madoff Investment Securities LLC (“BLMIS”) and the estate of Bernard L. Madoff (“Madoff”), opposes the motions to dismiss for lack of personal jurisdiction filed by three foreign entities Palmer Fund Management Services Limited (“Palmer”), Hyposwiss Private Bank Genève S.A. (“Hyposwiss”), and Access International Advisors Ltd. (“AIA Ltd.”) (collectively, the “Moving Defendants”). The brief is notable for its use of jurisdictional expanding agency relationship and “mere department” relationship theories – forward, backward and through “commonly-controlled” entities.
A serious game of motion practice brinksmanship is being played out in a $3 million plus preference proceeding brought by reorganized Visteon Corporation (“Visteon”). Defendant SL Alabama, LLC (“SL Alabama”) makes the first move toward final resolution nearly two months after a default judgment against it was vacated. SL Alabama’s Brief in Support of Motion to Dismiss is noteworthy for two reasons: the brief raises a fundamental legal issue – i.e. proof of service of a summons and complaint; and the facts may cause both defenders and prosecutors of preference actions to update their own practice checklists.
09/26/2011 – JPMorgans Submission in Response to Case Management Order filed in the Lehman Brothers Holdings Inc. Adversary Proceedings by JPMorgan Chase Bank, N.A. before U.S. Bankruptcy Judge James M. Peck in the Southern District of New York (Manhattan) filed by Wachtell, Lipton, Rosen & Katz (New York, NY) attorney Paul Vizcarrondo, Jr., Of Counsel: Harold S. Novikoff; Amy R. Wolf; Douglas K. Mayer; Emil A. Kleinhaus; Alexander B. Lees.
On August 15, 2011, U.S. Bankruptcy Judge James M. Peck issued a Case Management Order in Relation to the Impact of Stern v. Marshall (the “Stern Order”). Both the Plaintiffs, Lehman Brothers Holdings Inc. and Official Committee of Unsecured Creditors of Lehman Brothers Holdings Inc. (“Lehman”) and Defendant JPMorgan Chase Bank, N.A. (“JPMorgan”) each were directed, inter alia, to address each count of the 49 count amended complaint separately in stating whether such court was susceptible to: a ruling by the Bankruptcy Court on the pending motion to dismiss; either final adjudication by the Bankruptcy Court; or issuance of a report and recommendation by the Bankruptcy Court. JPMorgan’s response to this directive from Judge Peck is set forth below. Whether ultimately determined to be a correct or incorrect analysis of Stern, the issue analysis and presentation of JPMorgan is impressive.
09/23/2011 – Defendants Brief in Opposition to Plaintiffs Motion for Leave to Amend Complaint 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, Delaware) attorneys Robert J. Steam, Jr., Julie A. Finocchiaro, and Amanda R. Steele .
Defendant Barclays Capital Inc. (“Barclays” or “Defendant”) opposes the motion of the Pirinate Consulting Group, LLC (“Plaintiff’), Claims Agent for the Chapter 11 Estates of Spansion, Inc., et al. (the “Debtors”) to amend its avoidance complaint. Barclay’s opposition is based on dual grounds – first, the amended complaint so drastically alters the original pleading that can not relate back; and second, the proposed amend complaint itself would be would be subject to Rule 12(b)(6) dismissal. Barclays weaves together multiple limitations on avoidance actions, some common and some obscure, into a formidable effort to dismiss the Plaintiff’s avoidance complaint in its entirety.
08/29/2011 – Defendant’s Reply Brief in Support of Its Motion to Dismiss Complaint filed in the Marty Shoes Holdings, Inc. Adversary Proceedings by Brown Shoe Company, Inc. before U.S. Bankruptcy Judge Kevin J. Carey in the District of Delaware filed by Morris, Nichols, Arsht & Tunnell LLP (Wilmington, DE) attorneys Donna Culver and Andrew R. Remming; Bryan Cave LLP (St. Louis, MO) attorney Cullen K. Kuhn.
Defendant’s reply hammers home two basic points: a Chapter 7 trustee is not excused from complying with the established standards in Delaware Bankruptcy Court governing preference complaints; and discovery to get the facts needed to amend Plaintiff’s complaint is not permitted. Defendant’s discussion of the second point and citations of authority in support follow.
08/19/2011 – Defendant’s Memorandum of Law Concerning the Bankruptcy Courts Jurisdiction to Hear and Determine this Adversary Proceeding filed in the Coudert Brothers LLP Adversary Proceedings by Orrick Herrington & Sutcliffe LLP before U.S. Bankruptcy Judge Robert D. Drain in the Southern District of New York (Manhattan) filed by Holland & Knight LLP attorneys H. Barry Vasios and Barbra R. Parlin.
This memorandum is Defendant’s submission in response to the June 27, 2011 request from U.S. Bankruptcy Judge Robert D. Drain that the parties submit additional briefing on certain jurisdictional issues raised by the Supreme Court’s decision in Stern v. Marshall. Defendant provides a concise, three part formulation of the inquiry that a bankruptcy court must perform under Stern v. Marshall. Additionally, the Defendant addresses the impact of Stern in the context of the existing general order of reference. The Defendant concludes that Judge Drain is not authorized to finally determine any of the Plaintiff’s claims against Defendant.
08/22/2011 – Plaintiff’s Answering Brief to Motion to Dismiss Complaint filed in the Marty Shoes Holdings, Inc. Adversary Proceedings by Brown Shoe Company, Inc. before Chief, U.S. Bankruptcy Judge Kevin J. Carey in the District of Delaware filed by Ciardi Ciardi & Astin attorneys John D. McLauglin, Jr., Albert A. Ciardi, III, and Holly E. Smith. Emphasizing that he simply could not get from the Debtor further records regarding the purported preferential transfers, Chapter 7 Trustee Miller responds to Defendant’s motion to dismiss with a three pronged argument: general relationship allegations are enough; Valley Media goes too far; give me a break, I am a trustee.