Clean Air Car Service & Parking Branch Three, LLC v. Operr Service Bureau Inc.
1:24-cv-01088
E.D.N.YJun 24, 2024Background
- This action is an appeal from a U.S. Bankruptcy Court order approving the sale of the assets of Operr Plaza, LLC (“Operr Plaza Debtor”) to an unaffiliated third-party buyer for $2.5 million.
- The sale was conducted through a fair, competitive auction process, and the buyer was found to be a good-faith purchaser.
- Appellants (including Clean Air Car Service & Parking Branch Three, LLC, Operr Technologies, Inc., and Kevin S. Wang) sought to reverse the sale and to dismiss the bankruptcy proceedings entirely.
- The bankruptcy proceedings of Operr Plaza Debtor were jointly administered with Clean Air Car Service & Parking Branch Two, LLC, and separate appeals were filed challenging orders approving asset sales in both cases.
- Appellants alleged ownership and management rights in the Operr Plaza Debtor, but this position had already been rejected in prior related litigation.
- The district court had previously denied Appellants’ attempt to stay the sale pending appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the sale order for Operr Plaza’s assets should be vacated and reversed | Sale should be reversed and bankruptcy dismissed due to alleged improper sale and Appellants’ ownership rights | Sale was proper, buyer was good faith, auction fair, no valid ownership claim by Appellants | Appeal dismissed as statutorily moot under § 363(m) |
| Whether the buyer’s status as a good-faith purchaser could be challenged | Appellants’ asserted ownership rights present an adverse claim affecting good-faith status | No actual adverse claim affecting good faith; prior ruling found Appellants lack ownership | Appellants’ claim not adverse; buyer is good faith |
| Whether there was fraud or collusion in the sale process | Implied improper conduct in sale process | No evidence of fraud or collusion; sale price met fair process standards | No evidence; sale process was proper |
| Whether the bankruptcy proceeding itself should be dismissed | Proceeding should be dismissed sua sponte | Bankruptcy was properly administered; remedies followed procedures | No grounds for dismissal; proceeding stands |
Key Cases Cited
- In re Gucci, 126 F.3d 380 (2d Cir. 1997) (interprets good-faith purchaser protection under bankruptcy law)
- Matter of RE Palm Springs II, L.L.C., 65 F.4th 752 (5th Cir.) (defines adverse claim in context of good-faith purchase)
- In re Boston Generating, LLC, 440 B.R. 302 (Bankr. S.D.N.Y. 2010) (discusses fair value through sale process)