Cedar Hill, Inc. v. Universal Packaging, Inc., and John C. Wylie
01-15-00428-CV
| Tex. App. | May 27, 2015Background
- Universal Packaging, Inc., a Texas corporation, filed a voluntary Chapter 7 bankruptcy petition in the Southern District of Texas on April 13, 2015. John Wylie signed as the corporate president; Jarrod Martin (Wauson | Probus) signed as counsel.
- Schedules list total assets of $155,922.69 and total liabilities of $4,037,578.88 (schedules aggregate: secured claims $0, priority claims $1,433,072.86, nonpriority unsecured claims $2,604,396.02).
- Major priority unsecured claims include large unpaid taxes (IRS payroll taxes and others) totaling about $1.219 million; wage-priority claims for officers/employees total statutory caps for several individuals.
- Numerous trade creditors and customer deposits appear on Schedule F/G, including substantial customer deposits for partially completed packaging-machinery contracts (notable deposits: Eximius Coffee $141,000; SOS Food Lab $173,000; Jasek Farms $148,000; others).
- Multiple prepetition litigations and judgments referenced: federal and state suits (e.g., Ali & Abdul Trading Co. LLC v. Universal Packaging and Zenobia Co. actions), arbitration, and at least one judgment; several adversary/collection matters pending at filing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Chapter 7 filing is proper for Universal Packaging | Debtor asserts insolvency and seeks liquidation under Chapter 7 to address claims and administer estate | Creditors may argue impending litigation, ongoing business contracts, or preference/avoidance exposures could counsel against conversion or may seek relief from stay | Case documents show petition accepted and Chapter 7 case opened; trustee administration will follow (petition filed April 13, 2015) |
| Extent and priority of tax and wage claims | IRS and tax authorities assert priority claims for unpaid payroll and other taxes totaling ~ $1.2M; certain wage claims asserted up to statutory priority caps | Debtor may contest amounts or timing but schedules list those liabilities as priority claims | Schedule lists taxes and wage-priority claims as priority claims; trustee to review and object/resolve on proof of claim process |
| Treatment of customer deposits and executory contracts | Customers (contract counterparties) claim deposits for uncompleted packaging equipment; creditors may seek relief or reclamation | Debtor lists those deposits as liabilities and identifies corresponding executory contracts; trustee can assume/ reject executory contracts and address deposits as unsecured claims or advance payments | Schedules disclose deposits and executory contracts; ultimate treatment depends on trustee decisions and applicable Bankruptcy Code sections (assumption/rejection, reclamation, setoff) |
| Preference or insider transfers and payments prepetition | Creditors may seek to avoid preferential or fraudulent transfers, including payments to insiders or officers | Debtor disclosed certain prepetition payments and insider transactions (salaries, reimbursements, loans) and asserts ordinary course or legitimate business purposes | Debtor’s Schedule of transfers and Statement of Financial Affairs reveal transfers and insider payments; trustee and creditors may pursue avoidance actions if elements met |
Key Cases Cited
(No reported judicial opinions are cited in the filing materials.)