07/27/2011 – Defendant’s Reply in Further Support of Its Motion to Dismiss with Prejudice filed in the Sunset Aviation, Inc. Adversary Proceedings by Shorenstein Company LLC before Judge Walsh in the District of Delaware filed by Cross & Simon LLC (Wilmington, Delaware) attorney Michael J. Joyce; and Morrison & Foerster LLP (New York, New York) attorneys Melissa A. Hager John A. Pintarelli. Defendant Shorenstein Company LLC’s reply takes apart every aspect of the Chapter 7 Trustee’s position that substantive consolidation order shifted the date for calculating the preference period to the earliest debtor petition date. However, what makes this reply especially noteworthy is (1) its retort to the Trustee’s “equity of creditors” rhetoric; (2) its discussion of the Third Circuit’s approach to substantive consolidation; and (3) its argument that, if the Court is inclined to give nunc pro tunc effect, it should be to the petition date of the last filing debtor.
Motions Practice in Transfer Avoidance Bankruptcy Proceedings
Notes on Significant Filings of Motions to Dismiss, Summary Judgment and other Pre-Trial Matters
Irving H. Picard, Esq. v. Citibank, N.A. et al – Memorandum of Law in Support of Motion to Dismiss
07/26/2011 – Memorandum of Law in Support of Citibank N.A., Citicorp North America, Inc. and Citigroup Global Markets Limiteds Motion to Dismiss the Trustees Complaint filed in the Bernard l. Madoff Investment Securities LLC Adversary Proceedings by Citibank, N.A. et al before Judge U.S. Bankrutpcy Judge Burton R. Lifland in the Southern District of New York (Manhattan) filed by Cleary Gottlieb Steen & Hamilton LLP Carmine D. Boccuzzi, Jr. (New York, New York) attorneys David Y. Livshiz, Jr. and David Y. Livshiz.
Defendants Citibank, N.A., Citicorp North America, Inc.’ (“CNAI,” and together with Citibank, N.A., “Citibank”) and Citigroup Global Markets Limited (“CGML” and collectively with Citibank, “the Citi Defendants”) challenge Trustee Irving H. Picard’s effort to “clawback” four transfers, in the aggregate amount of $430 million, received by CGMI, and Citibank as purported subsequent transferees from Fairfield Sentry Limited (“Sentry”) and the Rye Select Broad Market Prime Fund, L.P. (“Prime Fund”). Defendants make three arguments in support of their motion to dismiss the Trustee’s thirteen count complaint to recover transfers on preference, constructive fraudulent conveyance and state law theories. The Defendants argue that the “safe harbors” of sections 546(e) and (g) of the Code protect the Defendants from avoidance the transfers at issue. Additionally, the Defendants claim that the Complaint fails to adequately plead recovery of the transfers under Section 550. However, this memorandum of law is significant for argument that, in the case of Sentry, “the Trustee has expressly relinquished his ability to ever avoid the initial transfers by entering into a settlement agreement with Sentry and agreeing to the entry of a consent judgment that does not avoid the alleged initial transfers.” Registered users click here to see a copy of this brief.
Kimball Hill, Inc. Bankruptcy: KHI Liquidation Trust v. Wisenbaker Builder Services, Inc. et al – Defendants’ Motion to Dismiss
07/21/2011 – Defendants’ Motion to Dismiss Adversary Proceeding filed in the Kimball Hill, Inc. Adversary Proceedings by Wisenbaker Builder Services, Inc. et al before Judge Sonderby in the Northern District of Illinois (Eastern) Filed by King & Spalding LLP (Houston, TX) Attorneys Henry J. Kaim, Edward L. Ripley, and Eric M. English; and Swanson, Martin & Bell, LLP (Chicago, IL) Attorney Darren B. Watts .
Delaware Bankruptcy Judge Sontchi Imposes Sanctions for “Grossly Deficient” Preference Complaint
Visteon Corporation v. Global Asset Protection Services, LLC (In re Visteon Corporation), Adv. Proc. No. 11-52070 (Bankr. Del. July 21, 2011) Delaware District of Delaware United States Bankruptcy Judge Christoper S. Sontchi issues an order imposing sanctions against plaintiff’s counsel for the “filing of a grossly deficient” complaint seeking recovery of preferential transfers under Section 547 and constructively fraudulent transfers under section 548(a)(1)(B). In this two page order, Judge Sontchi also (1) denies Defendant’s motion to dismiss, (2) grants leave to Plaintiff to file the First Amended Complaint (which Plaintiff had already filed), and (3) prohibits any further amendments to the complaint. Defendant already had signaled in its reply brief that the First Amended Complaint also is deficient, so the problems for Visteon’s claims against Defendant may not be over.
Marty Shoes Holdings, Inc. Bankruptcy: Miller v. Footwear Unlimited Inc. – Defendant’s Brief in Support of Its Motion to Dismiss Complaint
07/15/2011 – Defendant’s Brief in Support of Its Motion to Dismiss Complaint filed in the Marty Shoes Holdings, Inc. Adversary Proceedings by Footwear Unlimited Inc. before Judge Carey in the District of Delaware.
Chapter 7 Trustee George L. Miller (the “Trustee”), in each of the 98 Marty Shoes bankruptcy preference complaints, made the gutsy admission : “The Trustee finds himself in an extraordinary situation as he has been deprived of the Debtors’ books and records, though he has taken the necessary steps to locate these records.” Despite this invitation to file 12(b)(6) motions to dismiss and a prior warning given the Trustee by Chief U.S. Bankruptcy Judge Kevin J. Carey, this is the first motion to dismiss he is facing. Registered users click here to see a copy of this brief. Even more surprising, he has been able to settle 10 preference actions, including several above the 50% mark.
Visteon Corporation Bankruptcy: Visteon Corporation v. Global Asset Protection Services, LLC – Defendant’s Reply to Plaintiff’s Response to Motion to Dismiss
07/14/2011 – Defendant’s Reply to Plaintiff’s Response to Motion to Dismiss filed in the Visteon Corporation Adversary Proceedings by Global Asset Protection Services, LLC before Judge Sontchi in the District of Delaware.
In this rebuttal in support of its motion to dismiss, Defendant Global Asset Protection Services, LLC (“Defendant”) is faced with the daunting tasks of (1) continuing to press for dismissal despite Plaintiff’s post-motion amendment of the original complaint and (2) pressing for a Rule 11 award of attorney’s fees without undertaking the multi-step process required before a party may move for sanctions. It is Defendant’s response on the first of these issues that deserves note.
Sunset Aviation, Inc. Bankruptcy: Giuliano v. Shorenstein Company LLC – Plaintiff’s Memorandum of Law in Opposition to Motion to Dismiss
07/11/2011 – Plaintiff’s Memorandum of Law in Opposition to Shorenstein Company LLCs Motion to Dismiss filed in the Sunset Aviation, Inc. Adversary Proceedings by Shorenstein Company LLC before Judge Walsh in the District of Delaware. Plaintiff Alfred T. Giuliano, Chapter 7 Trustee, opposes the Defendant’s motion to dismiss a bankruptcy preference complaint seeking recovery of a single wire transfer made on December 2, 2008 in amount of $443,690.00 (the “Transfer”). The Defendant’s argument– the Transfer was made by a co-debtor who did not file its petition until May 1, 2009. The December 2 transfer date is outside of the preference period. Although the co-debtor cases were substantively consolidated, the Substantive Consolidation Order was not retroactive to the earliest petition date – i.e. nunc pro tunc. Plaintiff starts its opposition with the observation 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 effect on avoidance actions. Registered users click here to see a copy of this brief.
Visteon Corporation Bankruptcy: Visteon Corporation v. Global Asset Protection Services, LLC – Brief in Response to Global Asset Protection Services, LLCs Motion to Dismiss
The Plaintiff makes quick work of Defendant’s motion to dismiss advising the Court that the motion is moot “since in the interest of avoiding needless expense for the Reorganized Debtor, Visteon has submitted an Amended Complaint that fully addresses Global Asset’s concerns.” The response to the request for Rule 11 sanctions is what makes the brief noteworthy. Registered users click here to see a copy of this brief.
Visteon Corporation Bankruptcy: Visteon Corporation v. Global Asset Protection Services, LLC – Defendant’s Memorandum of Law in Support of Motion to Dismiss
06/23/2011 – Defendant’s Memorandum of Law in Support of Motion to Dismiss filed in the Visteon Corporation Adversary Proceedings by Global Asset Protection Services, LLC before Judge Sontchi in the District of Delaware. This motion to dismiss provides a good treatment of the Delaware Bankruptcy Court decisions addressing the pleading requirements for a Section 547 preference claim. This motion is noteworthy, however, for another reason. It includes a rare request for attorney’s fees under Fed. R. Civ. P. 11(b)(3). Registered users can view the motion by clicking this link.
Harvey Goldman & Company Bankruptcy: Gold v. Arm – Plaintiff’s Brief in Opposition to Motion to Dismiss
On July 14, 2010, an involuntary bankruptcy petition was filed against Harvey Goldman & Company d/b/a Worldwide Equipment Company(the “Debtor”). The Court later entered an Order for Relief under Chapter 7 of the Bankruptcy Code and a trustee was appointed (the “Trustee”). On February 18, 2011, the Trustee filed a complaint against Shirley Arm and Milton Arm (the “Defendants”) seeking two recover 2 payments made in the preference period. The payments totaled $5,000. The Defendants moved to dismiss the Trustee’s preference complaint on the grounds that the value of the transfers sought to be avoided was less than the jurisdictional minimum of $5,850 in Section 547(b)(9). The Trustee claims that Section 547(b)(9) does not apply.