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Showing 4 posts in Jurisdiction & Venue.

Motion to Transfer Denied, Bankruptcy Court Stresses Adverse Impact of Transfer and Relative Ease of Appearing in Delaware

In re Restaurants Acquisition I, LLC, Case No. 15-12406 (KG), 2016 WL 855089 (Bankr. D. Del. Mar. 4, 2016)

In this Memorandum Opinion, Judge Gross denied a motion to transfer venue to the Bankruptcy Court for the Northern District of Texas brought by the Texas Comptroller of Public Accounts and the Texas Workforce Commission (the “Movants”).  The Court recognized the strong interest in resolving state tax disputes in a local forum, but explained that the analysis must be viewed from the lens of all interested parties, with the primary focus concerning the economic administration of the estate and the impact on a debtor’s efforts to reorganize if transferred. Read More ›

No “Related to” Jurisdiction Despite Stipulation and Bankruptcy Court Order Governing the Non-Debtor Parties’ Rights and Responsibilities

Seagate Tech. (US) Holdings, Inc. v. Global Kato HG, LLC (In re Solyndra, LLC), 2015 WL 6125246 (MFW) (Bankr. D. Del. Oct. 16, 2015).

In this Memorandum Opinion, Judge Mary Walrath of Delaware’s Bankruptcy Court granted a motion to dismiss an adversary proceeding between two non-debtor parties based on lack of subject matter jurisdiction, and also remanded similar litigation between the parties back to California state court.  Among other things, the Court concluded that an order issued by the Bankruptcy Court approving a stipulation did not confer subject matter jurisdiction over a proceeding between two non-debtors alleging state law claims, where a state court could easily interpret and give effect to it. Read More ›

Plaintiff Successfully Obtains Venue Transfer Given Change in Circumstances; District Court Sua Sponte Transfers Venue of Related Cases

Zazzali v. Wavetronix LLC (In re DBSI, Inc.), No. 12-cv-1211 (GMS), et al. (D. Del. Sept. 25, 2014)

This Memorandum Opinion issued by Judge Sleet of the Delaware District Court relates to multiple bankruptcy and securities proceedings pending in Delaware stemming from the alleged Ponzi scheme perpetrated by directors of the DBSI entities.  The bankruptcy actions (collectively, the “Bankruptcy Cases”) at issue are: (i) a declaratory action commenced by several parties, including Wavetronix LLC, (collectively, the “Moving Parties”) related to investments, promissory notes and membership interests in or made by a DBSI debtor; and (ii) an adversary proceeding commenced by the DBSI post-confirmation liquidating trustees against Wavetronix seeking to enforce certain promissory notes.  While the Moving Parties initially chose to file the declaratory action in Delaware, Wavetronix allegedly discovered several affirmative defenses implicating the federal RICO statute while preparing its answer to the liquidating trustees’ complaint.  The Moving Parties then sought to withdraw the reference and transfer both Bankruptcy Cases to the District of Idaho.  Ultimately, the District Court granted their requests.  In doing so, the Court also sua sponte transferred related actions commenced in the District Court by the liquidating trustee against hundreds of defendants, alleging violations of the Securities Exchange Act, breaches of contract, common law fraud, negligence, and breach of fiduciary duties (the “Securities Cases”). Read More ›

An Estate Release Does Not Preclude Tort Plaintiffs From Pursuing Direct, Particularized Claims Against Released Parties

In re Caribbean Petroleum Corp. et al., No. 10-12553 (KG), 2014 WL 3360563 (Bankr. D. Del. July 9, 2014)

In this Memorandum Opinion, the Honorable Kevin Gross held (i) that the Bankruptcy Court has post-confirmation jurisdiction to decide the extent and scope of releases contained in plans it considers and confirms and that (ii) the release at issue made by the debtors in favor of their former officers and/or directors did not prevent third-party tort claimants from pursuing their claims against such released parties.  In reaching its jurisdictional conclusion, the Court relied upon the Third Circuit’s holding in In re Resorts Int’l, Inc., 372 F.3d 154 (3d Cir. 2004), to overcome the fact that the dispute before it involved only non-debtors and had no conceivable effect on the bankruptcy estates.  Moreover, in deciding the extent and scope of the estate release, Judge Gross distinguished the Third Circuit’s recent Opinion in In re Emoral, Inc., 740 F.3d 875 (3d Cir. 2014), (analyzed here) to hold that the tort claims asserted against the released parties were personal and thus, not property of the debtors’ estates.  Accordingly, the claims could not have been released by the debtors.  Read More ›